Speculators pare bearish bets on dollar

22 Oct, 2017

Speculators trimmed their bearish bets on the US dollar in the latest week to the smallest position in more than a month, but retained a significantly negative bias against the greenback, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. The value of the dollar's net short position, derived from net positions of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars, was $12.65 billion, in the week to October 17.
That compares with a net short position of $15.42 billion the previous week and marks the fourteenth straight week that investors have had a net short position on the greenback. To be short a currency means traders believe it will fall in value. 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 $16.33 billion, down from $19.28 billion a week earlier.
The dollar has slipped this year as investors fretted over US President Donald Trump's inability to pass proposed tax cuts and infrastructure spending plans through Congress. The dollar index, which tracks the greenback against six major currencies, is down about 8 percent this year, its worst performance for any comparable period since 2003.
The index found some relief this week on hopes that President Trump's tax-cut plan would make further headway after the Senate passed a budget resolution. On Thursday, the Senate approved a budget blueprint for the 2018 fiscal year that will pave the way for Republicans to pursue a tax-cut package without Democratic support.
Investors have also viewed as bullish for the dollar remarks this week from Federal Reserve Chair Janet Yellen and other members of the Fed that suggest the central bank is moving forward with another rate hike this year. Meanwhile, speculators retained a net short position in the Japanese yen, ahead of Japan's national election on Sunday. Japanese Prime Minister Shinzo Abe's ruling coalition is on track for a big win a media survey showed on Monday.

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