Dollar net shorts fall to five-month low

Speculators' net short dollar positioning slid to its lowest level in five months, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. The value of the net short dollar position was $4.85 billion in the week ended May 29, from $7.98 billion the previous week. The net short dollar position has declined for six straight weeks.
US dollar positioning was derived from net contracts of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and 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 equivalent to $5.19 billion, down from $8.45 billion the previous week.
That was the lowest net short dollar positioning since late December. The dollar has continued to outperform the market's expectations, underpinned initially by position adjustment as net short bets reached extreme levels, improving US economic data, and more recently political concerns out of Europe. Since mid-April, the dollar has rallied by more than 6 percent. A robust US non-farm payrolls report lifted the dollar on Friday. it opened the debate for further rate increases this year, beyond what has been priced in by the market.
But Shaun Osborne, chief FX strategist at Scotiabank in Toronto, said the dollar's rally could be running out of steam because all the good news in terms of growth and rate hike expectations have already been factored in by investors. "We view the current strength as unsustainable," Osborne said. "Longer-term risks remain for the US dollar in the form of structural negatives, such as wider US fiscal imbalances, and bearish, longer-term secular pressures."
In the cryptocurrency market, speculators' net short position on bitcoin Cboe futures was little changed at 1,679 contracts from 1,659 the previous week, the data showed. Bitcoin last traded at $7,434.85, down 0.8 percent on the day on the Bitstamp platform.