May 27, 2016 / 8:46 PM / in 3 years

Speculators long U.S. dollar for first time in six weeks: CFTC, Reuters

(Reuters) - Speculators turned bullish on the U.S. dollar for the first time in six weeks, with net longs on the currency notching their largest level since late March.

More upbeat U.S. economic data as well as suggestions of a possible interest rate increase next month by several Federal Reserve officials in recent speeches have boosted sentiment on the dollar.

The value of the dollar’s net long position was $3.73 billion in the week ended May 24, reversing the previous week’s short position of $4.19 billion, according to Reuters calculations and data from the Commodity Futures Trading Commission released on Friday.

On Friday, Fed Chair Janet Yellen said the U.S. central bank should raise interest rates in the coming months if the economy picks up as expected and jobs continue to be generated.

Her comments echoed the sentiment of other Fed officials as well as minutes from the Fed’s April 26-27 policy meeting, published last week. The minutes showed most Fed policymakers considered it appropriate to raise rates in June if data continued to point to an improvement in second-quarter growth.

As a result, Fed funds futures, based on the CME Group’s FedWatch tool, moved to price in a 30 percent chance of a June hike late on Friday, up from 19 percent a week ago.

The dollar has consequently rallied nearly four percent against a basket of currencies in the last 18 days. For the month of May, the dollar was up 2.9 percent, on pace for its largest monthly gain since November.

Meanwhile, speculators slashed net long yen contracts to 22,059, from 58,919 contracts the previous week. This week’s net long yen contracts were the smallest since mid-January.

Persistent warnings of intervention by the Bank of Japan to weaken the yen after its recent strength have convinced speculators to lay off the Japanese currency for now.

The Reuters calculation for the aggregate U.S. dollar position is derived from net positions of International Monetary Market speculators in the yen, euro, sterling, Swiss franc and Canadian and Australian dollars.

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

24 May 2016 Prior week

week

Long 54,792 86,165

Short 32,733 27,246

Net 22,059 58,919

EURO (Contracts of 125,000 euros)

24 May 2016 Prior week

week

Long 93,955 101,723

Short 131,850 124,310

Net -37,895 -22,587

POUND STERLING (Contracts of 62,500 pounds sterling)

24 May 2016 Prior week

week

Long 38,557 37,533

Short 71,392 75,955

Net -32,835 -38,422

SWISS FRANC (Contracts of 125,000 Swiss francs)

24 May 2016 Prior week

week

Long 24,884 22,463

Short 20,930 18,316

Net 3,954 4,147

CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars)

24 May 2016 Prior week

week

Long 32,834 37,009

Short 12,787 14,303

Net 20,047 22,706

AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars)

24 May 2016 Prior week

week

Long 51,712 71,793

Short 51,588 46,900

Net 124 24,893

MEXICAN PESO (Contracts of 500,000 pesos)

24 May 2016 Prior week

week

Long 27,017 25,219

Short 74,477 70,910

Net -47,460 -45,691

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

24 May 2016 Prior week

week

Long 30,414 32,545

Short 25,838 25,857

Net 4,576 6,688

Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu Nomiyama and Andrew Hay

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