Net long positions on the US dollar increased in the latest week after two straight weeks of declines, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. The value of the dollar's net long position rose to $8 billion in the week ended June 6, from $7.53 billion the previous week.
"The positioning reflects investors and currency traders looking for safety ahead of the events of Thursday," said Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto. Currency traders had been on edge this week ahead of Thursday's general election in Britain, a European Central Bank policy decision and testimony by former FBI Director James Comey.
Worries about Comey's firing by US President Donald Trump in May have added to market doubts over the Trump administration's ability to deliver a promised boost to growth. Comey in testimony on Thursday accused Trump of firing him to try to undermine an investigation of possible collusion between the 2016 presidential campaign team and Russia, but did not say whether he thought the president sought to obstruct justice, which soothed nerves.
Euro net longs, meanwhile, rose to the highest since May 2011, CFTC data showed. The single currency has gained against the dollar over the past five months, benefiting from broad greenback weakness and the view that rising inflation would prompt the ECB to hike interest rates in early 2018. "We are looking at investor confidence levels in the euro area that is the best in more than a decade, at least," said Schamotta. "So it's a very positive story for the euro area overall."
Sterling net shorts rose to 36,716 contracts, the most in four weeks, data showed. The British pound fell to a seven-week low on Friday after a shock election result cast doubt on Britain's talks to leave the European Union. "Turns out there was a very vital need for insurance against downside there," Schamotta said. The Reuters calculation for the aggregate US dollar position is derived from net positions of International Monetary speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars.