To be long a currency is to make a bet it will rise, while being short is a bet its value will decline. Concerns about global equity weakness and China's deepening slowdown convinced speculators that the Federal Reserve would delay raising interest rates. That prompted a sell-off in the dollar the last two weeks.
At the same time, investors bought back the euro and yen, as they unwound carry trades, or bets in high-yielding assets, funded in both low-interest rate currencies. As a result, net euro short contracts dropped to 66,078 in the latest week, from 92,732 previously. This week's net euro shorts were the smallest in more than a year. Net short yen contracts also fell to 39,059, from 90,130 the previous week. That was the lowest net shorts since mid-May. The Reuters calculation for the aggregate US dollar position is derived from net positions of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars.