Speculators boost U.S. dollar bets to nine month-high: CFTC, Reuters

October 21, 2016 3:57 PM EDT

Euro and Dollar banknotes are seen in a picture illustration taken October 19, 2016. REUTERS/Leonhard Foeger


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By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) - Speculators raised favorable bets on the U.S. dollar for a fourth straight week, with net longs hitting their highest in roughly nine months, Reuters calculations and data from the Commodity Futures Trading Commission showed on Friday.

The value of the dollar's net long position rose to $18.44 billion in the week ended Oct. 18, from $14.72 billion the previous week. This week's net dollar position was the largest since late January, having exceeded $10 billion for three consecutive weeks.

Expectations of an impending interest rate hike by the Federal Reserve at the December policy meeting have continued to support the dollar, which has gained more than 3 percent so far this month. The U.S. currency was on track for its best monthly performance since January 2015.

"A December rate hike is broadly acknowledged as much more likely to occur than one in November," said James Chen, head of research at Forex.com in Bedminster, New Jersey.

However, Chen pointed out that as "safer" Democratic candidate Hillary Clinton continues to widen her lead in the race for the White House over her more market-moving rival, Republican candidate Donald Trump, the risk imposed by the election could continue to diminish.

"This possibly leaves the door open, however narrowly, for the Fed to make a move in November," he said.

The euro net short position, meanwhile, hit its largest since late July at 109,268 contracts, data showed.

Europe's shared currency has been under pressure all week and dovish signals from European Central Bank President Mario Draghi on Thursday suggested further scope for the euro to weaken further.

"It appears that the ECB's vast asset-buying program may likely increase instead of decrease ... and the euro is now targeting the $1.0800 support level to the downside," said Forex.com's Chen.

So far this month, the euro has lost more than 3 percent of its value against the dollar.

In other contracts, Japanese yen net long futures continued to fall, now at 36,991 contracts, their lowest level in three months.

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Dan Grebler and Tom Brown)



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