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Two Ways To Play: Dollar Bears Soften Their Stance

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Strengthen your portfolio in good times and bad.

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Dollar bears soften their stance

Dollar bears are cutting their bets against the greenback.

According to the Financial Times, data provided by the Chicago Mercantile Exchange showed investors cut their net short positions in the US dollar from 172,367 contracts on December 1 to 107,284 contracts on December 8.

The drop had a notional value of nearly $10 billion and marked the biggest weekly shift of 2009 as well as the largest since the summer of 2008.

The change in sentiment started when US unemployment numbers came in better than expected on Friday, December 4. The figures sparked speculation that the Federal Reserve would end its loose monetary policy sooner than expected.

From the Bull Pen: We'll get more insight with the FOMC statement tomorrow afternoon, but it's likely that the speculation of the Fed tightening up is very premature. The uptrend in hard assets is still in tact. Consider a play in the silver ETF (SLV); a sell stop can be set below recent lows ($16.50).

From the Bear Cave: With everything denominated in dollars, if you think the actual crowded trade is to be the dollar bull, then this pullback in the Euro ETF (FXE) may be an opportunity. A near-term sell stop can be set below $145 support.

For more ways to play and other trading ideas from more than 30 top market pros, take a free trial to our Buzz & Banter.

A Quick Check Around the World

Asian trading closed with the Nikkei -0.22%, India -1.29%, Hang Seng -1.23%, Shanghai -0.86%, and Taiwan (Closed).

Across the pond, we see the FTSE -0.71%, CAC -0.16%, DAX -0.18%

As of 8:15 AM EST, S&P Futures are trading -3.50 to 1105.25. Nasdaq futures are -5.755 to 1802.00

A Look at Commodities

Over in commodities, crude oil is +0.07 to 69.58 while gold is -10.40 to 1113.40 this morning. Silver is -14.00 to 1720 and copper -3.100 to 312.10.

The dollar Index is +0.6450 to 77.3800.

On the Radar

Economics

08:30 Core PPI 0.2% cons.
08:30 PPI 0.9% cons.
08:30 Empire Manufacturing 25.00 cons.
09:00 Net Long-term TIC Flows
09:15 Capacity Utilization 71.1% cons.
09:15 Industrial Production 0.6% cons.

Click here for the full trading radar.

Good luck today!
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