Speculators slashed bullish bets on the US dollar for a fourth straight week, with net longs falling to their lowest in nearly two years, 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 $4.65 billion in the week ended March 29, from $5.91 billion the previous week. Dollar net longs came in below $10 billion for a seventh consecutive week.
In March, the dollar index fell 3.7 percent, its weakest monthly performance since April last year. The dollar has struggled as revised interest rate forecasts from the Federal Reserve, or the so-called "dot plots", released a few weeks ago showed just two rate increases in 2016. In contrast, at the December meeting of the Federal Open Market Committee, the central bank projections showed at least four rate hikes this year.
Even a strong US jobs report for March released on Friday was not expected to change the Fed's dovish view on the US economy. "The higher unemployment rate confirms that more improvements need to be seen before the Fed can pull the trigger on raising rates," said Kathy Lien, managing director of FX strategy at BK Asset Management in New York.
"The increase in the jobless rate guarantees that rates will remain unchanged in April and unless the next two retail sales and/or earnings reports show big improvements, monetary policy will be held steady in June as well." In other currencies, euro net shorts continued to decline, to their lowest in roughly a month in the latest week. Net euro shorts fell to 63,811 contracts from 66,053 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, sterling, Swiss franc and Canadian and Australian dollars.