Speculators boost bullish US$ bets

New York

SPECULATORS' net long bets on the US dollar rose to their highest level since January 2016 in the latest week, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.

The value of the net long dollar position was US$28.66 billion in the week ended Nov 6, up from US$26.74 billion the previous week. Speculators were net long on dollars for the 21st straight week, after being short for 48 consecutive weeks.

To be long on a currency means traders believe it will rise in value, while being short points to a bearish bias.

US 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 that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real and Russian ruble, the US dollar posted a net long position valued at US$29.951 billion, compared with a net long position valued at US$28.25 billion a week earlier.

The US dollar rose towards a 16-month high against the euro on Friday as falling equity prices spurred a flight to quality and the Federal Reserve reaffirmed its monetary tightening stance, citing the strong US economy.

The greenback had fallen broadly earlier last week after mid-term elections split power in the US Congress, giving Democrats greater ability to check any major initiatives from President Donald Trump. Investors worried that the outcome would make further fiscal stimulus measures unlikely.

But the currency bounced back, and on Friday returned to outperforming most major currencies, underpinned by the robust US economy and rising interest rates.

Analysts, however, warned that dollar bulls could run into trouble in the longer term.

"The political divide looms as a potential threat to the president's pro-growth agenda, clouding the dollar's longer run prospects," Joe Manimbo, senior market analyst at Western Union Business Solutions said in a note to clients.

Bitcoin was down 1 per cent at US$6,324.99 on the Bitstamp platform on Friday, after slipping to a one-week low of US$6,309 earlier in the session. REUTERS