How high is the US dollar going to go?

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From BNPParibas:

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The dollar has performed well in October, moving rapidly towards our bullish USD year-end targets of EURUSD 1.08, USDJPY 108 and USDCAD 1.35. We remain constructive on the dollar heading into an expected December rate hike. However, we believe the USD has gained ground too quickly and is now vulnerable to a retreat. We note the following warnings signs for USD bulls:

1) Positioning: Our positioning indicator suggests markets have become long USD. While the position is not very stretched yet, we are back to levels last seen before the USD stalled in January 2016. Moreover, the position has swung from short to long very quickly, suggesting market participants are not engaged at “good levels” and may be quick to stop out of trades.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.