Speculators reduce short US dollar bets

Speculators' net short US dollar bets declined for the first time in six weeks, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. The value of the net short dollar position, derived from net holdings of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars, was $12.93 billion, in the week to February 6.
The previous week's net short position on the dollar was $13.73 billion. In a broader measure of dollar positioning that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real, and Russian rouble, the US dollar posted a net short position valued at $17.0 billion, down from $17.48 billion the week before.
The dollar rebounded this week amid higher bond yields and interest rate expectations, a scenario that has triggered a sell-off in the US equity market. The dollar has also benefited from safe-haven bids as a result. "What is unambiguously clear is that whenever there's a global equity market sell-off, the US dollar and Japanese yen are the best performers.
That was the case this past week when we saw the yen and dollar skyrocket across the board," said Kathy Lien, managing director of FX strategy at BK Asset Management in New York. Up until last week, the dollar had been mired in negative sentiment as other major central banks have started to normalize their interest rate policies, pushing their currencies higher at the expense of the greenback.
The dollar was still down nearly 2 percent on the year to date. In 2017 it declined 10 percent. Speculators, meanwhile, also trimmed net short positions on bitcoin futures traded on CBOE Global Markets to 2,040 contracts this week, from 2,139 contracts the previous week, CFTC data showed.
After a roller-coaster ride that saw bitcoin plunge along with other risk assets, the virtual currency stabilized over the last two sessions, trading up 3 percent at $8,495 on Friday. It has fallen about 70 percent from its peak of almost $20,000 in December and was down more than 40 percent so far this year. It gained more than 1,300 percent last year.