US dollar net shorts hit highest in more than two months
- The value of the net short dollar position was $29.02 billion in the week ended Dec. 8, from net shorts of $25.74 billion the previous week.
- US dollar positioning was derived from net contracts of International Monetary Market speculators in the Japanese yen, euro, British pound and Swiss franc.
NEW YORK: US dollar net short positioning in the latest week climbed to its highest since late September, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.
The value of the net short dollar position was $29.02 billion in the week ended Dec. 8, from net shorts of $25.74 billion the previous week. US dollar net short bets increased for a third straight week, with the speculative community being short the currency for the last nine months.
US dollar positioning was derived from net contracts of International Monetary Market speculators in the Japanese yen, euro, British pound and Swiss franc, as well as the Canadian and Australian dollars.
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 of $30.023 billion, up from net shorts of $26.653 billion the week before.
There has been no letup in dollar selling the last few months, with the dollar index tumbling last week to its lowest in more than 2-1/2 years. So far this year, the dollar has been down 5.7%, its weakest performance since 2017.
Investors have sold the dollar on expectations of a global recovery with the positive vaccine news and further US stimulus that should lift the market's risk appetite.
At the same time, the Federal Reserve has committed to keep interest rates low for some time, as well as maintain its asset purchases program that should keep the dollar in check.
"CTAs (trend-followers and momentum traders) were collectively net 'long' the US dollar index futures for much of the past two years," said Ryan Fitzmaurice, senior commodities strategist at Rabobank.
"The group finally flipped to a net 'short' position this past June though as trend and momentum signals turned bearish."
In other currencies, sterling positioning flipped to net longs of 5,710 contracts this week from net shorts of 7,899 the previous week, as investors, though cautious, continued to price in the prospect of a Brexit trade deal.
Net long positioning on the Japanese yen, meanwhile, surged to 48,166 contracts, the largest since September 2016.
Comments
Comments are closed for this article.