Speculators cut US dollar shorts to lowest in 11 weeks

Speculators' net short dollar position in the latest week fell to its lowest level in nearly three months, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. The value of the net short dollar position was $10.84 billion in the week ended May 8, from $15.15 billion the previous week. This week's dollar net shorts were the smallest since the week ended Feb. 20.
Short-term investors have been short the dollar since mid-July last year. US dollar positioning was derived from net contracts of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars.
In a wider measure of dollar positioning that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real and Russian ruble, the US dollar posted a net short position equivalent to $13.31 billion, down from $18.32 billion the previous week.
That broader net short dollar positioning was the lowest since mid-March. Sentiment on the dollar has markedly improved in the last few weeks due to surging bond yields and signs of rising inflation that have spurred expectations of more aggressive interest rate hikes by the Federal Reserve.
Over the last two weeks, the dollar has rallied more than 2 percent against a basket of six major currencies. The dollar's path, however, could change in the next few weeks. This week brought data showing a weaker-than-expected inflation outlook, which has pressured the greenback. "Expectations of accelerated US inflation have tentatively cooled due to a series of tepid data readings, including US wage growth, the producer price index, and the consumer price index, all of which were generally weaker than expected," said James Chen, head of research at Forex.com in Bedminster, New Jersey.
"Cumulatively, these lower inflation readings have combined to give the US dollar some pause," he added. Speculators' net short position on bitcoin Cboe futures edged up to 1,635 contracts from 1,597 contracts the previous week, the data showed. After experiencing a slowdown for most of the year amid concerns of a clamp-down by regulators, bitcoin has recovered some ground in recent weeks. For the week, however, bitcoin fell 5.2 percent on the BitStamp platform, after rising for five straight weeks.