Currency speculators boosted bets in favour of the euro to the highest since December 2007 in the latest week, while the value of bets against the dollar rose further, data from the Commodity Futures Trading Commission showed on Friday.
The value of the dollar's net short position rose to $35.36 billion in the week ended March 8 from $34.9 billion a week earlier, according to CFTC and Reuters calculations. It was the largest net short dollar position for which Reuters has data, dating back to June 2008.
Net long euro positions rose to 62,294 contracts in the latest week, the highest since mid-December 2007, from 51,308 contracts in the prior week. Bullish sentiment toward the euro increased significantly after the European Central Bank signalled on March 3 an interest-rate hike in April. The euro hit a four-month high above $1.40 on Monday before retreating.
Bets in favour of the Swiss franc rose to 23,661 contracts, the highest since early December 2009, the CFTC data showed. The franc has benefited from safe-haven demand in recent weeks as political tensions escalated in the Middle East and North Africa. Currency speculators also increased long positions in the Canadian and Australian dollars, but they sharply trimmed bets in favour of the Japanese yen.
"It was only a notable decline in yen net longs that kept the aggregate US dollar net position from being an absolute blowout," said David Watt, senior currency strategist at RBC Capital Markets. To be short a currency is to bet it will decrease in value, while being long a currency is a bet that its value will rise. The Reuters calculation for the aggregate US dollar position is derived from the net positions of International Monetary Market speculators in the yen, euro, British pound, Swiss franc, Canadian and Australian dollars.
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