Investors and traders are extremely bearish on the U.S. dollar, says Morgan Stanley currency analyst Calvin Tse.
The dollar’s value has dropped for four consecutive weeks and 14 out of the last 15 weeks, he wrote in a report obtained by Business Insider.
“Moreover, last week’s flow was in the seventh percentile, indicating that net dollar selling has only been greater than this amount 7 percent of the time over the past two years.”
As a result, dollar selling momentum has intensified, Tse says. “Our reading is close to negative 3.0, which signals heavy dollar-bearish momentum. The last time we’ve seen levels as extreme as this was in mid-August.”
All this begs the question, whither the dollar from here?
Business Insider’ Vincent Fernando sees a good chance for further weakness.
Despite the decline cited by Tse, “the U.S. dollar is still at a higher level than it was at the beginning of 2010, based on the U.S. Dollar Index,” Fernando writes.
“So it's not all that wild to think the dollar can keep falling from where it is today.”
Others agree, saying additional monetary stimulus will hurt the dollar.
“The prospect of an expansion of quantitative easing by the Fed is supporting risky assets while weighing on the U.S. dollar,” Barclays bank currency analysts wrote in a note to clients obtained by Bloomberg.
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