Currency speculators trimmed bets against the dollar in the latest week and opened a long position in the yen for the first time in six weeks, data from the Commodity Futures Trading Commission showed on Friday. The value of the dollar's net short position fell to $27.68 billion in the week ended May 10, from a two-month high of $35.01 billion a week earlier, according to CFTC and Reuters calculations.
The move came as concern about the strength of world growth hurt higher-yielding assets such as stocks, commodities and currencies such as the Australian dollar and caused investors to bail out of trades financed with the US currency. The dollar rose 1.3 percent this week against major currencies, adding to last week's 2.3 percent gain It was still down about 4 percent this year.
Speculators trimmed bets in favour of the Australian dollar, the pound and the euro, which has been hurt by concern that Greece will be forced to restructure its debts. They also flipped to a long yen position for the first time since the week ended March 29. To be short a currency is to bet it will decrease in value, while being long a currency is a bet 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, and Canadian and Australian dollars. Speculators have been betting against the dollar since July 2010, according to CFTC data, and the value of the net dollar short position has held above $25 billion since March. Worries about large US deficits and expectations that the Federal Reserve will hold interest rates at record lows well into 2012 have dulled the dollar's appeal in recent months.