Speculators further cut back bullish bets on the US dollar in the latest week to their smallest since July last year, declining for a second straight week, according to Reuters calculations and data from the Commodity Futures Trading Commission released on Friday. The value of the dollar's net long position fell to $21.61 billion in the week ended September 1, from $23.99 billion the previous week. This was the second consecutive week net dollar longs came in below $30 billion.
To be long a currency is to make a bet it will rise, while being short is a bet its value will decline. Worries about declines in global equities and China's worsening economy have prompted investors to pare back expectations about an interest rate increase in September. That spurred a sell-off in the dollar last month. In August, the dollar index was down 1.6 percent.
As this developed, investors reversed carry trades or bets in more lucrative assets, funded by the low-yielding euro and yen, resulting in a rally in both currencies. That caused investors to reduce net short yen positions to 15,555 contracts, from 38,059 previously. This week's net short yen contracts were the smallest in about five months. Investors though marginally increased their bearish positions on the euro to 67,857 contracts this week, from 66,078 the week before. 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.