Speculators' net short dollar position declined to its lowest level since mid-March, according to calculations by Reuters and Commodity Futures Trading Commission data released last Friday, in line with the surge in US Treasury yields. The value of the net short dollar position was $19.77 billion in the week ended April 24, from $23.42 billion the previous week. Short-term investors have been short the dollar since mid-July last year.
US dollar positioning was derived from net 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 equivalent to $23.81 billion, down from $28.18 billion the previous week.
Dollar shorts in the previous week had reached an extreme level that prompted a pullback and rebalancing of positions. The dollar index, a gauge of the greenback's value against six major currencies, rose 1.4 percent last week, its strongest weekly gain since the week of February 9. Jane Foley, senior FX strategist, at Rabobank in London attributed the decline in net short dollars to the firmer tone of US Treasury yields.
Benchmark, US 10-year yields rose more than 3 percent last week, the highest in more than four years, bolstered by what some market participants believed to be rising inflation expectations. Foley added that while speculators maintained shorts last week, the US dollar likely picked up support in the spot market as well.
Euro longs, meanwhile, pulled back from record highs the previous week, declining to 130,594 contracts. Rabobank's Foley said the lack of hawkish commentary at last week's European Central Bank meeting prompted a softer tone for the euro in the spot market. Meanwhile, speculators' net short position on bitcoin Cboe futures slipped to 1,829 contracts from 1,883 contracts the week before.
Bitcoin hit an all-time high of just under $20,000 in December 2017 and has since fallen to as low as $5,920. On Monday, it was down 0.8 percent on the day at $9,318 on the BitStamp platform. After experiencing a slowdown for most of the year amid concerns of a clampdown on the space by regulators, crypto-currencies led by bitcoin are starting to regain traction, analysts said. Thomas Lee, managing partner and co-founder of Fundstrat Global Advisors, in New York, believes bitcoin has bottomed and institutional investors have become net buyers of crypto-currencies.