Speculators' net short dollar position slid to its lowest level in 12 weeks, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. The value of the net short dollar position was $9.82 billion in the week ended May 15, from $10.84 billion the previous week. The net short dollar position has declined for four straight weeks.
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 $11.02 billion, down from $13.31 billion the previous week. That was the lowest net short dollar positioning in four months.
Since mid-April, the dollar has rallied by more than 5 percent, underpinned by rising US Treasury yields and solid economic data that puts the Federal Reserve on track to raise interest rates at least two more times this year. However, Eric Viloria, currency strategist at Wells Fargo Securities, believes the dollar's rally should prove temporary, although he said for now there is further room for the greenback to extend its gains.
But he expects that once global economic trends become more stable and major foreign central banks start signalling they would adjust monetary policy later this year, the dollar should resume its downtrend. In the cryptocurrency market, speculators' net short position on bitcoin Cboe futures rose to 1,874 contracts from 1,635 the previous week, the data showed.
After a downtrend in the first few months of the year, bitcoin has stabilized between $8,000 and $9,000. It last traded at $8,229.91, up 2.2 percent on the day on the Bitstamp platform. Fundstrat in a research note on Friday said the CME posted record volumes in the past week for bitcoin futures, which suggests institutional interest on the virtual currency is rising.