September 1, 2017 / 8:57 PM / a year ago

UPDATE 1-Speculators' net short dollar bets largest since Jan 2013 - CFTC, Reuters

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    By Saqib Iqbal Ahmed
    Sept 1 (Reuters) - Speculators' net short bets on the U.S.
dollar grew to the largest since January 2013 in the latest
week, according to calculations by Reuters and Commodity Futures
Trading Commission data released on Friday.
    The value of the dollar's net short position, derived from
net positions of International Monetary Market speculators in
the yen, euro, British pound, Swiss franc and Canadian and
Australian dollars, was $10.28 billion, in the week to Aug. 29.
    That compares with a net short position of $9.40 billion the
previous week.
    In a wider measure of dollar positioning that includes net
contracts on the New Zealand dollar, Mexican peso, Brazilian
real and Russian ruble, the U.S. dollar posted a net short
position valued at $14.66 billion, compared with $13.93 billion
a week earlier.
    To be long a currency means investors believe it will
increase in value, while being short a currency is a bet that
its value will fall.
    "The very, very overcrowded short position on the dollar
helped to set the stage for the big reversal that we saw this
morning," said Karl Schamotta, director of global product and
market strategy at Cambridge Global Payments in Toronto.
    On Friday, traders initially sold the dollar in a knee-jerk
reaction to Labor Department data showing nonfarm payrolls
increased by 156,000 last month, below expectations of
economists polled by Reuters for a gain of 180,000.
    The greenbeck soon reversed course and was supported by
release of strong manufacturing data that boosted sentiment that
economic growth is solid.
    "When speculators are leveraged up like this, there is a
greater likelihood that they need to cover positions quickly and
you have situations where traders are very quick on the trigger
finger," Schamotta said.
    Speculators have increasingly lost faith in U.S. President
Donald Trump's ability to pass his proposed tax cuts and
infrastructure spending plans, which were expected to pump up
growth and inflation, increasing the pace of interest rate hikes
by the Federal Reserve.
    The greenback is coming off its sixth consecutive monthly
decline against a basket of major trading partner currencies,
although August's drop of 0.21 percent was the smallest since
the streak began in March.
    Meanwhile, speculators' net long bets on the Canadian dollar
 were at 53,167 contracts, and held close to the largest
position since January 2013, data showed.
    "That extreme positioning does carry risk. At some point we
could see a reversal. Perhaps, even as soon as the Bank of
Canada announcement next week," Schamotta said.
    The Canadian dollar posted a 2-year high against its
U.S. counterpart on Friday, as investors headed into the long
weekend bracing for a possible interest rate hike next week from
the Bank of Canada.
    Japanese Yen (Contracts of 12,500,000 yen) 
 $7.805 billion
         29 Aug 2017            Prior week
 Long             43,889            45,162
 Short           112,413           119,248
 Net             -68,524           -74,086
EURO (Contracts of 125,000 euros)
 $-12.948 billion
         29 Aug 2017            Prior week
 Long            194,331           197,818
 Short           107,812           109,842
 Net              86,519            87,976
POUND STERLING (Contracts of 62,500 pounds sterling)
 $4.163 billion
         29 Aug 2017           Prior week
 Long             60,053           61,484
 Short           111,608          107,384
 Net             -51,555          -45,900
SWISS FRANC (Contracts of 125,000 Swiss francs)
 $0.233 billion
         29 Aug 2017           Prior week
 Long             13,209           12,168
 Short            14,987           14,155
 Net              -1,778           -1,987
CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars)
 $-4.25 billion
         29 Aug 2017           Prior week
 Long             86,806           80,965
 Short            33,639           29,866
 Net              53,167           51,099
AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars)
 $-5.287 billion 
         29 Aug 2017           Prior week
 Long            100,962           91,558
 Short            34,435           31,074
 Net              66,527           60,484
MEXICAN PESO (Contracts of 500,000 pesos)
 $-2.72 billion
         29 Aug 2017           Prior week
 Long            135,549          137,856
 Short            38,539           40,238
 Net              97,010           97,618
NEW ZEALAND DOLLAR (Contracts of 100,000 New Zealand dollars)
 $-1.364 billion 
         29 Aug 2017           Prior week
 Long             29,002           29,590
 Short            10,198            7,708
 Net              18,804           21,882

 (Reporting by Saqib Iqbal Ahmed; Editing by James Dalgleish)
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