Speculators go long on dollar; first time since last year

Currency speculators took long bets on the US dollar for the first time since July 2010 in the latest week, according to data from the Commodity Futures Trading Commission released on Friday. The value of the dollar's net long position rose to $1.77 billion in the week ended September 13, from a net short position of $3.94 billion a week earlier. It was the first long dollar position in 14-1/2 months.
Speculators have been dollar short since July 6, 2010, according to Reuters calculations. The biggest changes were from speculators increasing their short positions in the euro and the pound. 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, Canadian and Australian dollars.
To be short a currency is to bet it will decline in value, while being long is a bet its value will rise. Non-commercial speculators increased net short positions in the euro to 54,459 contracts in the week ended September 13, according to the data, from 36,443 in the prior week.
The net position was comprised of 25,704 long contracts, a drop of 7,463 contracts from the prior week, and 80,163 short contracts, up 10,553 contracts. Open interest stood at 264,500 contracts, up 54,985 from the prior week. Non-commercial reportable long positions represented 9.7 percent of open interest, while non-commercial reportable short positions were 30.3 percent of open interest.
Open interest is taken as a sign of the strength in a given price movement though not an indication of direction. Increasing open interest is said by analysts to illustrate strength behind the price movement, while a drop shows weakening price movement. A rise in open interest also indicates that the security is being actively traded while a decline would show less activity.
The net position was comprised of 33,969 long contracts, a rise of 3,426 contracts from the prior week, and 60,162 short contracts, up 16,399 contracts. Open interest stood at 142,120 contracts, up 31,748 from the prior week. Non-commercial reportable long positions represented 23.9 percent of open interest, while non-commercial reportable short positions were 42.3 percent of open interest.
A trader is classified as "non-commercial" if the trader is not using futures contracts in a particular currency for hedging purposes. Non-commercial speculators take the risks Non-commercial speculators sharply increased short positions in the pound, pushing the net total position to 26,193 contracts in the week ended September 13, according to the data, double the net short total position of 13,220 the week before.