Currency speculators increased bets on the US dollar in the latest week, according to data from the Commodity Futures Trading Commission released on Friday. The value of the dollar's net long position rose to $14.24 billion in the week ended October 11, from net longs of $13.77 billion a week earlier.
It was the fifth week of long dollar bets, after a string of net short dollar positions dating back to July 2010. 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, Canadian and Australian dollars.
Reflecting rising optimism about some form of resolution to the euro zone debt crisis, speculators cut their net short euro position to 73,795 contracts from net shorts of 82,697 the previous week. To be short a currency is to bet it will decline in value, while being long is a view its value will rise. The decline in non-commercial net short positions comes from a drop of 1,064 long positions to 17,040 contracts, and a sharper cut of 9,966 short positions to 90,835 contracts.
A trader is classified as "non-commercial" if the trader is not using futures contracts in a particular currency for hedging purposes. Non-commercial speculators take the risks. Open interest in euro contracts rose 2,328 contracts to 223,167. Reportable non-commercial long positions represented 7.6 percent of open interest while non-commercial short positions were 40.7 percent of open interest.
Open interest is taken as a sign of the strength in a given price movement, though not an indication of direction. Increasing open interest is said by analysts to illustrate strength behind the price movement, while a drop shows weakening price movement.
A rise in open interest also indicates that the security is being actively traded, while a decline would show less activity. Net short sterling contracts fell to 61,972 from 68,724 net shorts the prior week, according to CFTC data. The change was due to an increase of 462 long contracts to 15,391 contracts and a drop of 6,290 short contracts to 77,363 contracts.
Open interest in sterling contracts rose 9,209 contracts to 184,709. Reportable non-commercial long positions represented 8.3 percent of open interest while non-commercial short positions were 41.9 percent of open interest. Net long yen positions fell to 35,119 contracts from 43,462 the week before. Yen open interest rose by 19,125 contracts to 153,849 contracts.