Speculators reduced bullish bets on the US dollar in the latest week, with net longs falling to their lowest in roughly two months, according to Reuters calculations and data from the Commodity Futures Trading Commission released on Friday. The value of the dollar's net long position slid to $28.78 billion in the week ended January 5, from $31.80 billion in the previous week. This week's net longs were the lowest since November 3, according to Reuters estimates.
It was also the second straight week speculators reduced their net longs on the dollar. Investors this week have been spooked by turmoil in China's stock market and its currency the yuan, which spurred concerns that the Federal Reserve may have to further slow the pace of its tightening policy. That's a dollar-bearish scenario and may have contributed to the unwinding of long-held dollar net longs. As a result, the dollar ended the week on a slightly negative note, down 0.2 percent, despite Friday's strong US nonfarm payrolls report.
This week's China-led market losses have also resulted in gains in the yen, a traditional safe haven in times of stress and uncertainty. For the first time in more than three years, speculators have turned net long on the yen. This week, Japanese yen net longs totalled 4,103 contracts, compared with a net short of 17,226 in the previous week. The yen ended the week up 2.3 percent against the dollar, its best weekly performance since August 2013. The Reuters calculation for the aggregate US dollar position is derived from net positions of International Monetary Market speculators in the yen, euro, sterling, Swiss franc and Canadian and Australian dollars.
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