Speculators' net short dollar bets rose in the latest week to the largest position since mid-October, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. The value of the net short dollar positions, derived from net positions of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars, was $8.85 billion, in the week to January 9.
That compares with a net short position of $4.62 billion the previous week. To be short a currency means traders believe it will fall in value. 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 $10.14 billion, compared with $5.43 billion the week before.
The dollar index, which measures the greenback against six rival currencies, fell to a three-year low of 90.934 on Friday. The index ended 2017 down nearly 10 percent, its worst annual showing since 2003. Concerns about economic growth and political stability have hurt the US dollar and continue to weigh on its outlook, Alfonso Esparza, senior currency analyst at OANDA in Toronto, said.
Investors are also paying close attention to the inflation scenario, which so far has been lackluster, Esparza said. The US central bank's preferred inflation measure, the personal consumption expenditures price index excluding food and energy, has missed its target since May 2012.
The net long position in the euro grew to 144,691 contracts, a fresh record, the data showed. On Friday, the euro surged to a more than three-year high against the dollar on hopes that European Central Bank policymakers are preparing to reduce their vast monetary stimulus program. The net long position on sterling grew to the largest since September 2014. Sterling on Friday rose to its highest level against the dollar since the vote to leave the European Union, after a report that the Netherlands and Spain were open to a deal for Britain to remain as close as possible to the trading bloc.
Meanwhile, speculators' net short position on bitcoin Cboe futures rose to 1,907 contracts this week, the data showed. South Korea's government said on Thursday it plans to ban cryptocurrency trading, sending bitcoin prices plummeting and throwing the virtual coin market into turmoil as the nation's police and tax authorities raided local exchanges on alleged tax evasion.