Currency speculators favoured the US dollar in the latest week for the first time since early September, according to data from the Commodity Futures Trading Commission released on Friday. The value of the dollar's net long position totalled $1.296 billion in the week ended November 6, from net shorts of around $710 million the previous week. It was the first net long position for the greenback in two months.
To be long a currency is to bet it will increase in value, while being short is a view its value will decline. The dollar has been a major beneficiary of safe-haven flows as worries about Europe came to the fore once again. Expectations about slower growth in Germany and uncertainty about whether Spain would seek a bailout or not have weighed on the euro and benefited the dollar.
In addition, worries over a looming "fiscal cliff" for the United States, which could trigger tax increases and spending cuts if not addressed, have also prompted investors to seek the greenback's safety. "Risk aversion remains firmly entrenched," said Samarjit Shankar, director of strategy at BNY Mellon in Boston. He cited BNY Mellon's iFlow FX indicators, which showed that the US dollar remains steadily net bought.
In contrast, Shankar said he saw continued outflows from the euro, which has now been net sold for a sixth successive trading day. 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, Canadian and Australian dollars.