Speculators abandoned bets in favour of the yen this week, shorting the Japanese currency by the biggest margin in nearly a year, and building up a record long position in the Australian dollar, data showed on Friday. The Commodity and Futures Trading Commission's report also showed speculators' net short US dollar position totalled $25.18 billion in the week to April 5, compared to $27.77 billion the prior week.
The slight improvement in dollar sentiment came mostly at the expense of the yen. Speculators went short the currency to the tune of 43,231 contracts. That was the first net short yen position in six weeks and the biggest since May 2010. Speculators' net long Aussie position rose to 90,938 contracts, the biggest on record, according to CFTC data. To be short a currency is to bet it will decrease in value, while being long a currency is a bet its value will rise.
The yen has shed more than 10 percent against the dollar since mid-March, when a post-earthquake rally sent it to a record high and provoked central bank intervention to arrest disorderly yen gains. Since then, signs of US economic improvement have pushed up US bond yields, increasing the dollar's appeal over the yen. Japan's economy, meanwhile, is likely to struggle as the government assesses the damage wreaked by last month's hurricane and tsunami.
The US dollar's performance has been far less impressive against other currencies, particularly the Australian dollar. This week, the Aussie currency rose above $1.05, its highest since it was began to float freely in 1983. High commodity prices and optimism about world growth have increased its appeal. Australia is an important source of raw materials for fast-growing Asian countries such as China.
Comments
Comments are closed for this article.