June 22, 2018 / 8:46 PM / 3 months ago

Speculators turn net long dollars for first time since July 2017: CFTC, Reuters

NEW YORK (Reuters) - Speculators turned bullish on the dollar for the first time since July last year, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday, as sentiment improved after the Federal Reserve forecast two more interest rate hikes this year.

FILE PHOTO: A U.S. Dollar note is seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration/File Photo

The value of the net long dollar position was $8.64 billion in the week ended June 19, shifting from a net short of $7.42 billion the previous week. This week’s net long dollar position was the largest since May 16 last year.U.S. 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 <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 long position equivalent to $10.38 billion, up from a net short position of $7.10 billion previous week.

That was the largest net long positioning since mid-May, Reuters data showed.

“This is capitulation of the dollar shorts that were in position at the beginning of the year,” said Karl Schamotta, director of global product and market strategy, at Cambridge Global Payments in Toronto.

“Monetary tightening is continuing at pace in the United States while there has been a moderation in terms of expectations around the ECB (European Central Bank) and other major central banks,” he added.

Last week, the Federal Reserve further accelerated a dollar rally when it raised interest rates as expected, and signaled two more hikes this year, citing higher inflation.

But before that Fed decision, the dollar was already on an upward trajectory amid a round of robust U.S. economic data. Since mid-April, the dollar has rallied by more than 7 percent.

In the cryptocurrency market, speculators’ net short position on bitcoin Cboe futures fell to 1,595 contracts <0#1CFTC1330E1> from net shorts of 1,945 the previous week, the data showed.

Bitcoin and the cryptocurrency market, however, remained mired in a bearish trend amid intense regulatory scrutiny.

The virtual currency on Friday fell as low as $6,085.59 BTC=BTSP on Bitstamp, the lowest since early February and not far from this year's trough of just below $6,000. It was last down nearly 9 percent at $6,119.08.

So far in 2018, bitcoin has fallen nearly 56 percent, after soaring more than 1,300 percent last year.

Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Saqib Iqbal Ahmed; Editing by Chizu Nomiyama and Grant McCool

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