Analysis-Dollar gains from rivals' trouble may lack staying power

Core Viewpoint - The recent rebound of the dollar is expected to be temporary, influenced by repositioning due to short-term factors such as the U.S. government shutdown and political instability in other countries [1][5]. Group 1: Dollar Performance - The dollar has increased approximately 3% against a basket of currencies since mid-September, recovering from over three-year lows after a nearly 11% decline earlier this year [1]. - Speculators' net short positions on the dollar decreased to $9.86 billion from a two-year high of $20.96 billion, indicating a shift in sentiment towards the dollar [2]. - The euro has declined about 1.3% in October, while the yen has fallen nearly 3% against the dollar, reflecting broader market dynamics [6]. Group 2: Market Sentiment and Predictions - Analysts express skepticism regarding the sustainability of the dollar's recovery, with expectations of a weakening U.S. economy and declining interest rates in the coming months [3]. - The recent dollar strength is largely attributed to investors adjusting their positions rather than a fundamental shift in economic conditions [3][4]. - Political crises in France and Japan have diverted investor focus from the dollar's challenges, contributing to its recent performance [5].