U.S. dollar net long bets jump to largest since mid-June 2019 -CFTC, Reuters data

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(C) Reuters. FILE PHOTO: A picture illustration shows U.S. 100 dollar bank notes taken in Tokyo August 2, 2011. REUTERS/Yuriko Nakao/File Photo

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) – U.S. dollar net longs in the latest week surged to their highest level in more than two years, according to Reuters calculations and Commodity Futures Trading Commission data released on Friday.

The value of the net long dollar position was $22.89 billion in the week ended Oct. 5, compared with $16.37 billion in the previous week. U.S. dollar positioning has been net long for 12 straight weeks after being net short for 16 months.

U.S. dollar positioning was derived from net contracts of International Monetary Market speculators in the Japanese yen, euro, British pound and Swiss franc, as well as the Canadian and Australian dollars.

In a broader measure of dollar positioning, which includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real and Russian rouble, the greenback posted a net long position of $22.535 billion this week, from $15.33 billion previously.

The dollar has been on a tear since the September 21-22 Federal Reserve monetary policy meeting that suggested a possible tapering of the Fed’s asset purchases starting November this year and ending in June 2022.

Tapering tends to be dollar-positive because the Fed would be buying less debt assets, which means that there will be less dollars in circulation, making the currency more valuable.

Since the September meeting, the dollar index has risen more than 1%.

The dollar pulled back, however, on Friday after an underwhelming U.S. non-farm payrolls report. Data showed U.S. non-farm payrolls increased by 194,000 jobs last month, compared with forecasts for 500,000 new jobs. But data for August was revised to show 366,000 jobs created instead of the previously reported 235,000 positions.

“U.S. inflation data released next Wednesday may add to evidence that inflationary pressures are proving less ‘transitory’ than generally anticipated,” wrote Jonathan Petersen, markets economist, at Capital Economics in its latest research note.

“Our view remains that this will push U.S. yields and the dollar a bit higher in the coming months.”

In other contracts, euro positioning turned short in the latest week with net short contracts of 22,334, from a net long position of 872 the previous week. The euro remains a laggard among G10 currencies, weighed down by the European Central bank’s dovish stance.

In the cryptocurrency market, bitcoin net shorts totaled 1,518 contracts in the week ended Oct. 5, from net short contracts of 883 the previous week. This week’s net short contracts in bitcoin were the largest since late July.

That said, bitcoin on Friday soared to a five-month high of $56,168, boosted by continued institutional demand, gaining some legitimacy among investors.

Since a low of $28,600 hit in June, bitcoin has gained 87.5%.

Japanese Yen (Contracts of 12,500,000 yen)

$7.144 billion

05 Oct 2021 Prior week

week

Long 31,569 35,328

Short 95,263 100,088

Net -63,694 -64,760

EURO (Contracts of 125,000 euros)

$3.237 billion

05 Oct 2021 Prior week

week

Long 196,819 195,043

Short 219,153 194,171

Net -22,334 872

POUND STERLING (Contracts of 62,500 pounds sterling)

$1.705 billion

05 Oct 2021 Prior week

week

Long 48,137 57,923

Short 68,155 55,959

Net -20,018 1,964

SWISS FRANC (Contracts of 125,000 Swiss francs)

$2.113 billion

05 Oct 2021 Prior week

week

Long 2,274 6,734

Short 17,953 18,321

Net -15,679 -11,587

CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars)

$2.135 billion

05 Oct 2021 Prior week

week

Long 18,580 21,873

Short 45,446 42,108

Net -26,866 -20,235

AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars)

$6.56 billion

05 Oct 2021 Prior week

week

Long 17,471 18,407

Short 107,450 104,790

Net -89,979 -86,383

MEXICAN PESO (Contracts of 500,000 pesos)

$0.866 billion

05 Oct 2021 Prior week

week

Long 77,074 92,423

Short 112,653 112,018

Net -35,579 -19,595

NEW ZEALAND DOLLAR (Contracts of 100,000 New Zealand dollars)

$-0.561 billion

05 Oct 2021 Prior week

week

Long 17,887 18,324

Short 9,831 8,078

Net 8,056 10,246