Make Kitco Your Homepage

UPDATE 1-Speculators increase U.S. dollar net short bets -CFTC, Reuters

Kitco News

(Adds details on dollar positioning, analyst quote, data, paragraphs 4-9; adds table)

By Dion Rabouin

NEW YORK, July 28 (Reuters) - Speculators increased their short bets against the U.S. dollar this week, as political uncertainty and reduced expectations for accelerated monetary policy tightening from the Federal Reserve have reversed positioning on the greenback.

The value of net short bets against the dollar rose to $3.92 billion in the week ending July 25, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday. That was up from last week's $1.91 billion, which was the first week of net short bets on the dollar in more than a year.

Speculators raised net long bets on the Canadian dollar and the Mexican peso. Long contracts on the loonie rose to their highest since March while long bets on the Mexican peso hit their highest level since May 2013.

To be long a currency means investors believe it will increase in value, while being short a currency is a bet that its value will fall.

Analysts said they expected further dollar weakness in light of the continued uncertainty from Washington and the dollar's outperformance over the past few years.

"I don't know about the short term, but medium term the dollar has to weaken substantially more than it is right now," said Axel Merk, president and portfolio manager at Merk Hard Currency Fund in Palo Alto, California.

Merk said he expected interest rates to continue higher in France and Germany while they remain on pause in the United States, making the dollar a less attractive currency for speculators to hold.

In a wider measure of dollar positioning that includes net futures contracts in the New Zealand dollar, Mexican peso, Brazilian real and Russian ruble, the U.S. dollar posted a net short position valued at $9.55 billion, the largest since February 2013. The Reuters calculation for the aggregate U.S. dollar position is derived from net positions of International Monetary speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars.

Japanese Yen (Contracts of 12,500,000 yen) $13.574 billion

25 Jul 2017 Prior week

week Long 28,018 37,419 Short 149,507 164,338 Net -121,489 -126,919 EURO (Contracts of 125,000 euros) $-13.23 billion

25 Jul 2017 Prior week

week Long 197,656 199,540 Short 106,814 108,219 Net 90,842 91,321 POUND STERLING (Contracts of 62,500 pounds sterling) $2.132 billion

25 Jul 2017 Prior week

week Long 52,152 50,883 Short 78,349 67,356 Net -26,197 -16,473 SWISS FRANC (Contracts of 125,000 Swiss francs) $0.203 billion

25 Jul 2017 Prior week

week Long 14,893 13,832 Short 16,443 17,499 Net -1,550 -3,667 CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars) $-2.128 billion

25 Jul 2017 Prior week

week Long 70,385 60,000 Short 43,772 51,957 Net 26,613 8,043 AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars) $-4.474 billion

25 Jul 2017 Prior week

week Long 80,799 69,075 Short 24,425 17,719 Net 56,374 51,356 MEXICAN PESO (Contracts of 500,000 pesos) $-3.176 billion

25 Jul 2017 Prior week

week Long 130,075 130,155 Short 17,185 17,616 Net 112,890 112,539 NEW ZEALAND DOLLAR (Contracts of 100,000 New Zealand dollars) $-2.581 billion

25 Jul 2017 Prior week

week Long 41,221 44,257 Short 6,416 8,276 Net 34,805 35,981 (Reporting by Dion Rabouin; Editing by David Gregorio)

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.