US dollar net short bets rise this week

NEW YORK: US dollar net shorts increased in the week ended Sept. 22 after falling for the previous three straight weeks, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.

The value of the net short dollar position hit $33.60 billion in the week from net shorts of $30.9 billion the previous week. US net shorts hit a more than nine-year high of $33.68 billion in late August.

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 broader 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 $33.989 billion, up from net shorts of $31.524 billion the week before.

The speculative community has been short the dollar since mid-March.

Shaun Osborne, chief FX strategist at Scotiabank, said the size of this week's net short increase was larger than the number by which speculative accounts trimmed negative bets on the dollar over the previous three weeks.

He also noted that net shorts on the dollar increased as investors increased long bets on other safe havens such as the yen and Swiss franc. Net long contracts on the euro also increased.

That said, the US dollar remained in recovery mode this month. So far in September, the dollar index was up around 2.7%, on pace for its largest monthly percentage gain in nearly four years.

The dollar has gained this month as investors fretted about the stalling global recovery, rising coronavirus infections in Europe, uncertainty around a US stimulus package, and the upcoming US elections.