Speculators increased bullish bets on the US dollar, after hitting their lowest level in more than a year in the previous 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 rose to $21.73 billion in the week ended September 29, from $20.48 billion the week before. This was the first increase in net dollar longs in three weeks. That said, this was the sixth straight week dollar longs came in under $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. The dollar's fortunes have been tied the last couple of months to the outlook for US interest rates, which has changed constantly, in line with US economic data. The longer the Federal Reserve delays raising interest rates, the more the dollar struggles.
For the month of September though, the dollar index was up 0.5 percent, way off the steep gains seen early this year. On a broad basis, the Fed is still expected to be the first major central bank to raise interest rates and that is seen benefiting the dollar. But the uncertainty about the timing of that first interest rate increase from the Fed has limited the dollar's upside and appeal to investors. In other currencies, the British pound turned net short to the tune of 2,047 contracts in the latest week, after posting a net long position the previous week. The other notable changes were an increase in net shorts for the Canadian dollar and a big jump in Mexican peso short contracts. 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.