U.S. Markets

U.S. dollar net shorts soar to highest in nine years: CFTC, Reuters

NEW YORK (Reuters) - Speculators’ net short U.S. dollar positioning soared to the highest level since August 2011, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday.

U.S. dollar banknote is seen in this picture illustration taken May 3, 2018. REUTERS/Dado Ruvic/Illustration

The position hit $24.27 billion in the week ended July 28, up from $18.81 billion the prior period. U.S. net shorts rose for a fourth straight week as bets against the greenback have persisted since mid-March.

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

In a wider measure of dollar positioning <0#NETUSDFX=> that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real, and Russian ruble, the U.S. dollar posted a net short position of $24.53 billion, compared with net shorts of $19.37 billion the week before. This week’s net short position was largest since April 2018, according to Reuters data.

In contrast, net euro longs hit a record high, CFTC data showed. Net euro longs were 157,559 contracts this week.

The greenback has struggled over the last few months, driven by factors including near-zero interest rates as well as Federal Reserve measures that flooded the international market with dollars via swap lines.

The buck was down about 10% from the year's high hit in March against a basket of currencies =USD. On Friday the dollar fell to its lowest in more than two years.

“The combination of falling real rates and rising risk assets has been a dominating force across markets over the past few months, which has likely contributed to the dollar sell-off over the same period,” said Goldman Sachs in a research note on Friday.

The euro’s outperformance kicked off in high gear when European Union leaders a few weeks ago clinched a massive stimulus plan that likely meant a less steep regional downturn.

Since its March lows as the coronavirus pandemic forced lockdowns across Europe, the euro has soared 12% versus the dollar.

Reporting by Gertrude Chavez-Dreyfuss; Editing by Tom Brown and Richard Chang