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 $9.59 billion, in the week to Jan. 16. That compares with a net short position of $8..85 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 $11.80 billion, compared with $10.14 billion the week before. The trade-weighted dollar index rose 0.14 percent to 90.665 on Friday.
On Wednesday, the index touched the lowest level since December 2014, with investors selling on the view that more central banks will join the Federal Reserve in raising interest rates, after years of ultra-loose policy adopted to combat the 2008 global financial crisis and subsequent recessions. The index was on pace for its fifth straight week of declines, its longest losing streak since May 2015, with worries over a possible US government shutdown weighing on investor sentiment.
Speculators have maintained a bearish stance on the greenback since mid-July, Reuters data showed. Excessive bearish bets against the dollar could spur a short squeeze in the event of any positive news for the dollar, some analysts said. The net long position on sterling grew to 26,204 contracts, the highest since September 2014, the data showed.
Sterling has rallied against the greenback in recent weeks, with traders welcoming positive noises from the European Union about negotiations for Britain's exit. Growing risk appetite has also encouraged sterling bulls to add to their positions against a widely weakened dollar. Meanwhile, speculators' net short position on bitcoin Cboe futures rose to a new high of 2,226 contracts, up from 1,907 contracts in the prior week, the data showed.