Currency speculators boosted bets in favour of the euro to the highest since January 2008 in the latest week, while bets against the dollar jumped across the board, data from the Commodity Futures Trading Commission showed on Friday. The value of the dollar's net short position rose to $34.9 billion in the week ended March 1 from $22.36 billion a week earlier, according to CFTC and Reuters calculations.
It was the largest net short dollar position for which Reuters has data, dating back to June 2008. Net long positions in the euro rose to 51,308 contracts, the highest since January 2008, from 45,598 contracts in the prior week. The euro has rallied against the dollar in recent sessions as inflation-fighting rhetoric from European Central Bank officials stoked expectations euro zone interest rates will rise faster than those in the United States.
Bets on the yen also jumped to 41,274 contracts, only the largest since November but a big change from the 27,746 short bets last week. Speculators reduced long positions in sterling, but they boosted bets in favour of gains in the Swiss franc, Australian and Canadian dollars.
The Swiss franc hit a record high against the dollar this week as turmoil in Libya drove investors to safe-haven assets. Euro and Canadian dollar long positions in US dollar terms accounted for $16.4 billion of the total $34.9 billion US dollar short position. To be short a currency is to bet it will decrease in value, while being long a currency is a bet that its value will rise. The Reuters calculation for the aggregate US dollar position is derived from the net positions of International Monetary Market speculators in the yen, euro, British pound, Swiss franc, Canadian and Australian dollars.
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