Bearish dollar bets at lowest since early January

Speculators' net short dollar bets fell in the last week to the lowest since early January, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. The value of the net short dollar positions, derived from net positions of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars, was $7.98 billion in the week to May 22.
That compares with a net short position of $9.82 billion the previous week and is the smallest net short dollar position since early January. To be short a currency means traders believe it will fall in value. In a wider measure of dollar positioning that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real and Russian ruble, the US dollar posted a net short position valued at $8.45 billion, compared with a short position valued at $11.02 billion a week earlier.
Since mid-April, the dollar has rallied hard, helped by rising US Treasury yields and solid economic data that puts the Federal Reserve on track to raise interest rates at least two more times this year. On Friday, the dollar index, which measures the greenback against a basket of six currencies, was up 0.48 percent at 94.209, after hitting a high of 94.249, its strongest since mid-November. The index has logged weekly gains in five of the last six weeks.
Despite its sharp rebound in recent weeks, speculators have consistently retained a net short bias against the greenback since mid-July. Most foreign exchange strategists expect the dollar's newfound shine to fade as the US economy's strength and higher interest rates fail to support the currency's resurgence for long, an early May Reuters poll found. Euro net longs, meanwhile, shrank to 109,744 contracts, the smallest position since late December, CFTC data showed.
The euro weakened on Friday and logged its sixth consecutive week of losses as rising bond yields in Italy triggered nervousness among investors, while brewing political instability in Spain also weighed on sentiment. Speculators' bets on the Japanese yen swung to a net short position of 2,767 contracts. The net short position on bitcoin CBOE futures was at 1,659 contracts, down from a net short position of 1,874 contracts the previous week, the data showed.