Speculators pared back bullish bets on the US dollar this week to their lowest level since late July last year, according to Reuters calculations and data from the Commodity Futures Trading Commission released on Friday. The value of the dollar's net long position fell to $20.97 billion in the week ended September 15, from $22.07 billion the previous week. This was the fourth straight week that dollar longs came in under $30 billion.
To be long a currency is to make a bet it will rise, while being short is a bet its value will decline. Dollar sentiment has taken a hit the last two weeks given mixed US economic data, suggesting that while the US economy was improving, there were still pockets of weakness. US inflation, for instance, remained low, one reason the Federal Reserve held off raising interest rates on Thursday. The decision disappointed investors who wanted the central bank to start tightening despite moderate US growth.
This month so far, the dollar index was down 0.6 percent, on track for its second monthly decline. Net short yen contracts, meanwhile, rose to 26,814 contracts from 6,662 the previous week, as investors grappled with persistent weakness and low inflation in the Japanese economy, a scenario that could prompt the Bank of Japan to launch another round of quantitative easing. 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 and Canadian and Australian dollars.
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