Speculators raised bullish bets on the US dollar to the largest position since March 2017, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. The value of the net long dollar position was $18.41 billion in the week ended July 17, up from $16.41 billion the previous week. Speculators were net long dollars for a fifth straight week, after being short for 48 consecutive weeks.
To be long a currency means traders believe it will rise in value, while being short points to a bearish bias. 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 long position valued at $19.74 billion, compared with a net long position valued at $17.94 billion a week earlier.
US dollar sentiment has improved over the last few months due to an improving economic backdrop and a hawkish Federal Reserve. Escalating tensions over trade policy between the United States and many of its key trading partners has also helped the greenback, with investors betting the dollar will gain at the expense of emerging market currencies which are dependent on commodity exports.
The currency did come under some pressure Thursday afternoon and on Friday as comments by US President Donald Trump complaining about the strength of the greenback and the rise in US interest rates squashed a rally that took it to a one-year high on Thursday. "The dollar, which remains well supported from a fundamental perspective, could fall further if investors begin to see a growing risk of the dollar being used as a tool in the Trump administration's attempts to shrink the nation's massive trade deficit," Omer Esiner, chief market analyst at Commonwealth Foreign Exchange, said in a note on Friday.
The US currency extended losses in afternoon trading on Friday after CNBC reported Trump was worried the Federal Reserve will raise interest rates twice more this year. Yen net short bets, meanwhile, grew to 58,650 contracts, the largest short position since March, CFTC data showed. The net short position on bitcoin CBOE futures was at 1,640 contracts, the largest short position in four weeks, the data showed.