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Speculators trim net long US dollar bets
SPECULATORS slightly trimmed their net long bets on the US dollar but maintained a significantly large bullish position, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.
The value of the net long dollar position was US$20.06 billion in the week ended July 31, down from US$20.33 billion the previous week. Speculators were net long dollars for a seventh straight week, after being short for 48 consecutive weeks.
To be long 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 rouble, the US dollar posted a net long position valued at US$21.22 billion, compared with a net long position valued at US$21.85 billion, a week earlier.
US dollar sentiment has improved over the last few months due to an improving economic backdrop and a hawkish Federal Reserve.
On Wednesday, the Fed kept rates unchanged but characterised the economy as strong, keeping the US central bank on track to increase borrowing costs in September and December.
"The dollar will continue to be at this current level. I don't foresee a selloff in the final two quarters," said Alfonso Esparza, senior currency analyst at OANDA in Toronto.
"The first quarter of 2019 is the big question mark, just because the Fed will have almost reached its normalisation goal and that's where it starts to get dicey," he said. REUTERS