Speculators' net short dollar bets rose slightly in the latest week, after shrinking for six straight weeks, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. The value of the net short dollar positions, derived from net positions of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars, was $5.54 billion in the week to June 5.
That compares with a net short position of $4.85 billion the previous week. 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 $5.25 billion, compared with a short position valued at $5.20 billion a week earlier. The dollar, which had risen steadily since mid-April, boosted by rising US Treasury yields and solid economic data, lost momentum this week.
The euro bouncing back from 10-month lows amid easing Italian political concerns, and speculation the ECB could signal intentions to start unwinding its massive bond purchasing program when it holds its policy meeting on June 14, helped push the greenback lower. For the week, the dollar index, which measures the greenback against a basket of six currencies, was down 0.7 percent, its largest weekly decline in 11 weeks.
June is expected to be a particularly eventful month for currency markets as an expected hike in US interest rates by the Federal Reserve, a European Central Bank policy meeting and a Brexit bill vote all pose risks for currency traders and could inject more volatility in the market. "Next week itself will be loaded with information as we'll have the results of the G7 meeting, the ECB and Fed both of which are likely hawkish and then the Trump summit with North Korea," Brad Bechtel, managing director, at Jefferies in New York, said in a note on Friday.
Top US allies scrambled on Friday to keep a Group of Seven nations summit from veering off track as President Donald Trump vowed to deal with "unfair trade practices" by Canada and the European Union.