Print Print 2020-03-22

Speculators' bets on US dollar turn net short

Speculators' bets on the US dollar swung to a net short position for the first time since June 2018 in the latest week, according to calculations by Reuters and US Commodity Futures Trading Commission data released on Friday.
Published 22 Mar, 2020 12:00am

Speculators' bets on the US dollar swung to a net short position for the first time since June 2018 in the latest week, according to calculations by Reuters and US Commodity Futures Trading Commission data released on Friday.
The value of the net short dollar position was $8.27 billion for the week ended March 17, compared with a net long position of $2.22 billion for the week before that.
US dollar positioning was derived from net contracts of International Monetary Market speculators in the Japanese 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 valued at $7.25 billion, compared with a net long position of $471 million, a week earlier.
Investors' appetite for risk has taken a beating in recent days amid growing worries about the economic fallout from the spread of the coronavirus. The dollar index that measures the strength of the greenback against six peers has risen about 4% this week, its largest weekly jump in more than a decade.
On Friday, the dollar eased as six major central banks announced a coordinated action to enhance liquidity in the currency, but bounced off its lows in afternoon trading as stocks weakened. The dollar's strength in recent days is partly due to investors reaching for the safety of the world's most liquid currency.
The US currency has also been supported by elevated volatility in FX markets which has upended carry trades - strategies where investors seek to borrow cheaper currencies to invest in higher yielding ones. Most notably, the surge in volatility has driven investors to buy euros as they unwind carry trades. Speculators' position on the euro turned net long for the first time since July 2018, the data showed.

Copyright Reuters, 2020

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