Currency speculators further pared bets in favour of the US dollar in the latest week to the lowest since November 2011, according to data from the Commodity Futures Trading Commission released on Friday. The value of the dollar's net long position fell to $8.92 billion in the week ended August 14, from $11.7 billion the previous week. It was the fourth straight decline in US dollar longs and was the smallest net long position in nine months.
To be long a currency is to bet it will rise in value, while being short is a view its value will fall. 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. Net longs in the Australian and Canadian dollars also increased to 66,679 and 28,593 contracts in the latest week. "Risk appetite was clearly higher with the increase in net longs in the Aussie and Canadian dollars," said Camilla Sutton, chief currency strategist, Scotia Capital in Toronto.
She said this all started a few weeks ago when European Central Bank President Mario Draghi said the bank will do whatever it takes to support the euro. Since then, the euro has stabilised and has not declined as sharply as many had expected, Sutton noted. The net short euro position is no longer as extreme as it was in June, but it is still significant at 137,810 contracts, slightly higher from the previous week's 131,711.
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