Speculators lift net long USD bets, highest since Jan 2017: CFTC, Reuters


© Reuters. U.S. Dollar banknotes are seen in this photo illustration

By Kate Duguid

NEW YORK (Reuters) – Speculators raised bullish bets on the U.S. dollar to the largest position since January 2017, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday.

The value of the net long dollar position was $20.33 billion in the week ended July 24, up from $18.41 billion the previous week. Speculators were net long dollars for a sixth straight week, after being short for 48 consecutive weeks.

To be long a currency means traders believe it will rise in value, while being short points to a bearish bias.

U.S. dollar positioning was derived from net contracts of International Monetary Market speculators in the 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 U.S. dollar posted a net long position valued at $21.85 billion, compared with a net long position valued at $19.74 billion a week earlier.

U.S. dollar sentiment has improved over the last few months due to an improving economic backdrop, rising interest rates – which have propped up demand – and U.S. protectionism.

The (), which measures the greenback against a basket of six rival currencies, fell on Friday after U.S. GDP data came in softer than expected, but some analysts said the case for owning dollars remains good.

“Interest rate differentials continue to support the U.S. dollar. We saw GDP in the U.S. reach 4.1 percent, which is higher than any of the other major currencies. Those economic fundamentals keep the dollar at a premium to its rivals,” said Greg Michalowski, director of technical analysis at ForexLive.com in Scottsdale, Arizona.

The U.S. government reported gross domestic product grew at a 4.1 percent annualized pace in the second quarter, accelerating from a revised 2.2 percent clip in the first three months of the year.

Escalating tensions over trade policy between the United States and many of its key trading partners had helped the greenback, with investors betting the dollar would gain at the expense of emerging market currencies, which are dependent on commodity exports.

The trade detente reached by U.S. President Donald Trump and European Commission President Jean-Claude Juncker announced on Wednesday caused the dollar to weaken. That development is likely to be reflected in next week’s CFTC data.

Yen net short bets, meanwhile, grew to 73,769 contracts, the largest short position since March, CFTC data showed.

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