Speculators' net short bets on the US dollar rose to their largest since late September 2012, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. The value of the dollar's net short position was $17.36 billion in the week to September 29, up from net shorts of $13.19 billion the previous week. Speculators have been net short the dollar for 11 straight weeks.
The dollar's net positioning was derived from net futures contracts of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars. In a wider measure of dollar positioning that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real and Russian ruble, the US dollar posted a net short position valued at $21.13 billion, up from $16.65 billion a week earlier.
The dollar overall has been rebounding from multi-year lows since early September, and has extended that recovery after more hawkish signals from the Federal Reserve during its last monetary policy meeting that raised prospects for a rate increase in December. The greenback has also been supported by new plans regarding US tax reform from the White House, analysts said. But James Chen, head of research at Forex.com in Bedminster, New Jersey noted that Fed Chair Janet Yellen has lately given some mixed signals.
This week, Yellen said the Fed may have "misspecified" its models for inflation, and "misjudged" key facts such as the underlying strength of the labor market and whether inflation expectations are as stable as they seem, and central bankers need to remain open to that possibility as they decide on policy. That said, Forex.com's Chen pointed out that expectations of a December rate increase remain high for now, and the US dollar has remained supported in its recovery.