US dollar net shorts climb to highest level in five weeks

New York

US dollar net short positioning climbed to its highest level since late October, according to calculations by Reuters and Commodity Futures Trading Commission data which were released on Friday.

The value of the net short dollar position was US$25.74 billion in the week ended Dec 1, from net shorts of US$24.31 billion the previous week. Speculators raised net short dollars 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 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 short position of US$26.653 billion, up from US$25.011 billion the week before.

The dollar continued its descent last week as a safe haven, weighed down by investors' increased appetite for risk amid a slew of positive vaccine news and renewed hopes for further novel coronavirus relief.

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A weaker-than-expected US non-farm payrolls report on Friday failed to dent the market's optimism for next year's outlook.

"With local governments crafting plans for vaccine distribution and Congress working towards a new stimulus deal before the end of the year, investors see pent-up demand as 2021's primary source of recovery," said Kathy Lien, managing director of FX Strategy, at BK Asset Management.

The greenback on Friday dropped to a more than 21/2-year low against a basket of major currencies, but edged higher late in afternoon trading as sterling fell amid a setback in Brexit negotiations.

In other currencies, net long positioning on the Japanese yen rose to 47,503 contracts, the highest since October 2016. REUTERS