Speculators increased bullish bets on the US dollar for the third straight week, pushing net longs to their highest since January 31, data from the Commodity Futures Trading Commission released on Friday and calculations by Reuters showed. The value of the dollar's net long position totalled $18.44 billion in the week ended March 21, up from $17.59 billion the previous week.
The value of the dollar has decreased since Tuesday, the last day the CFTC collected data, as concerns about how quickly the administration of US President Donald Trump would be able to implement pro-growth policies kindled safe-haven demand for currencies like the Japanese yen and Swiss franc.
The dollar index, which tracks the dollar against six major currencies, had been above 100 since early February and fell below that level on Tuesday for the first time since February 7. Prior to Tuesday's market re-route on the so-called Trump trade, the dollar had strengthened steadily in anticipation of an increase in US overnight interest rates by the Federal Reserve.
The Fed did raise rates on March 16, but the dollar came under pressure when the central bank stuck to its forecast for three hikes this year and included warnings about subdued inflation, undermining investors' hopes for a more hawkish sounding statement. That sent the dollar down, prompting a buying opportunity for speculators, said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "It was a week in which many (speculators) could've seen the dollar selloff as overdone," Esiner said.
Net short bets on the Japanese yen fell during the week after rising last week to their highest level since mid-January. To be long a currency is to bet its value will rise, while a short position is a bet that a currency's value will fall.
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