US dollar net short bets rise to highest since mid-March

[NEW YORK] US dollar net shorts climbed this week to the highest level since mid-March, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.

The value of the net short dollar position rose to US$11.95 billion in the week ended May 4, from net shorts of US$10.27 billion the previous week. US dollar net short contracts rose for a third straight week.

US 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 positions that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real and Russian ruble, the greenback posted a net short position of US$12,452 billion this week, compared with net shorts of US$10.52 billion the week before.

After rallying 2.5 per cent in March in line with the rise in US Treasury yields, the dollar came back down to earth in April, notching a monthly loss of 2.1 per cent. So far in May, the dollar downtrend continued, with monthly losses of 1.2 per cent so far.

The rise in US yields stalled after the Federal Reserve, in its last monetary policy statement and through several of its officials, repeatedly affirmed its dovish stance, further undermining the dollar.

On Friday, the dollar was further pressured by a non-farm payrolls report that was much weaker than expected - 266,000 new jobs instead of market forecasts for job gains of 978,000.

"A sharply below-consensus read in April's non-farm payrolls prompted a sell-off in the dollar across the board today as it likely relieved some pressure from the Fed to shift to a less dovish rhetoric," said ING in a research note. "At the same time, the data-miss was not enough to severely dent the underlying recovery story."

In the cryptocurrency market, bitcoin net shorts fell to 1,764 contracts, the smallest since July last year.

Bitcoin's gains have slowed this year as investors looked to other digital currencies such as ethereum for crypto exposure.

Since hitting an all-time high just under US$65,000 on April 14, bitcoin has actually fallen 18 per cent. Its market capitalisation remained at more than US$1 trillion.

On Friday, bitcoin was up 2.3 per cent at US$57,741.

REUTERS