Speculators reduced bullish bets on the US dollar in the latest week, pushing net longs to their lowest since early October, according to Commodity Futures Trading Commission data released on Friday and calculations by Reuters. The value of the dollar's net long position totalled $13.01 billion in the week ended February 28, from $15.02 billion the previous week.
Analysts said this week's decline in net long dollar positioning could be temporary in the wake of stronger signals by the Federal Reserve that it may raise rates this month. On Friday, Fed Chair Janet Yellen gave her strongest signal yet that the US central bank could nudge rates higher when it meets this month.
"At our meeting later this month, the committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate," Yellen said at a business luncheon in Chicago. Several of Yellen's colleagues at the Fed have also been signalling a move in March the past several weeks. "The (dollar) bulls are finally listening to the cohesiveness of Fed officials who have been saying all along (doves and hawks) that conditions are prime for tightening," said Kathy Lien, managing director of FX strategy at BK Asset Management in New York.
The dollar fell on Friday in the wake of Yellen's remarks, but that is more due to profit-taking since traders before the Fed chair's remarks wagered that she would strike a hawkish tone. According to Fed fund futures date, the odds of a rate hike this month sits at 90 percent, compared with 40 percent the week before. The Reuters calculation for the aggregate US dollar position is derived from net positions of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars.
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