Speculators' boost net short US dollar bets

Speculators' net short dollar bets rose to a three-week high in the latest week, 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 $11.29 billion in the week to February 27.
That compares with a net short position of $8.17 billion the previous week. 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 $14.51 billion, compared with $11.62 billion a week earlier.
The dollar index, which measures the greenback against a basket of six other major currencies, rose to nearly six-week high on Thursday, helped by strong data and an upbeat view on the economy from Federal Reserve Chairman Jerome Powell. "Markets were far too crowded on the short end of the dollar going into Powell's congressional testimony," said Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto.
"We have certainly seen bloodshed in the dollar short position this week," he said. "After (Powell's comments), I would expect that we are going to see longs increase on the dollar, and shorts increase on virtually every other currency," Schamotta said.
The dollar index managed to eke out a 0.1 percent gain for the week, despite a sharp fall on Friday, as investors fretted that President Donald Trump's proposal to impose hefty tariffs on steel and aluminum imports raised prospects of a trade war that could hurt the US economy. Meanwhile, net long positioning on the euro rose to 137,977 contracts, after three straight weeks of declines. Italians vote in a national election on Sunday, while the leading political parties in Germany will decide on a coalition deal that could secure Angela Merkel a fourth term as chancellor. "There does seem to be a sense of calm about what's likely to come down the pipeline from the political perspective," said Schamotta.