Speculators trimmed their bearish bets on the US dollar in the latest week to the smallest position in 15 weeks, 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 $3.37 billion, in the week to October 31.
That compares with a net short position of $8.02 billion the previous week and marks the 16th straight week that speculators 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 $5.61 billion, down from $10.72 billion a week earlier. Generally upbeat US economic data in the wake of the recent hurricanes and an increase in market expectations for higher interest rates have helped support the dollar in recent weeks, said Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto.
The dollar index, which tracks the greenback against six major currencies, rose 1.6 percent in October, its best monthly performance since February. "The dollar is rising on expectations that tax reform will move ahead in some form," Schamotta said. "It's certainly unlikely to move ahead in the form that was proposed yesterday, but the markets are looking for increased largesse there and a high level of economic activity as those changes take root."
Republicans in the US House of Representatives unveiled a tax bill on Thursday that would cost $1.51 trillion and deliver deep tax cuts as promised by President Donald Trump, setting off a race in Congress to give him his first major legislative win. Congressional passage of the legislation, which would affect nearly every US company and family, was far from certain, however, and some business groups quickly came out against it and Democrats swiftly condemned it as a giveaway to the rich.
Meanwhile, the net short position in the yen rose to 118,869 contracts, the largest since late July. The Japanese currency has been hampered by persistently low inflation.