Speculators reduced bullish bets on the US dollar for a fourth straight week, as net longs fell to their lowest since late October, according to data from the Commodity Futures Trading Commission released on Friday and calculations by Reuters. The value of the dollar's net long position totalled $18.47 billion in the week ended Jan. 31, down from $20.04 billion the previous week.
The US currency has slumped this year, undermined by the Trump administration's weak dollar rhetoric, driving its worst January performance in three decades. This week was no exception as the dollar continued to trend lower, posting its largest weekly percentage fall in more than six months.
A smaller-than-expected rise in US wage growth as seen in Friday's US non-farm payrolls report for January has dampened the outlook for the dollar as well. The data suggested that there was still some slack in the labour market that would keep inflation in check, likely slowing the pace of US rate hikes by the Federal Reserve this year.
"The US dollar is likely to be pressured further, as it has been since the beginning of the year, as the promise of accelerated Fed tightening fades for the time being," said James Chen, head of research at Forex.com in Bedminster, New Jersey.
CFTC data also showed net short contracts on the Japanese yen fell to 58,331, the lowest since early December.
The yen's moves, especially on Friday, have been mostly dictated by the Bank of Japan's action. The BoJ on Friday announced plans to buy an unlimited amount of 5-10 year Japanese government bonds to "hit CPI target as soon as possible," said BoJ Governor Haruhiko Kuroda.
"The (Japanese) central bank's actions are negative for JGBs and negative for the yen and will be a factor that helps keep dollar/yen supported," said Kathy lien, managing director of FX strategy at BK Asset Management in New York.
Net shorts on the Mexican peso, meanwhile, continued to fall and in the latest week touched their lowest since late December. The Mexican peso has been the most sensitive to US President Donald Trump's comments about immigration and trade policies, falling to record lows against the dollar a few weeks ago.
The peso, however, has since recovered as investors bought back the currency on the view that the worst was behind it. It has been one of the best-performing currencies against the dollar since Trump's inauguration on Jan. 20, rising about 8 percent.
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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