Investors rein in US dollar longs as debt ceiling looms

Political uncertainty in the US has caused the dollar to weaken, forcing many investors to reverse their long positions in the currency to a more neutral stance.

The start of this month saw a political deadlock between the Republicans and the Democrats that led to a government shutdown, and the looming debt ceiling deadline on 17 October has caused further jitters among investors. In the three months to 9 October, sterling has appreciated 7.9% against the dollar, while the euro is up 5.8% over the period, with the dollar trading at £1.60 and €1.35, respectively. This month currency movements have been more muted, but a number of global banks predict the dollar has further to fall. In its latest note, Bank of America Merrill Lynch said its a...