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
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Leslie Adler and Shailesh Kuber)
