PHOTO
Image used for illustrative purpose. Notes from a seized haul of $7.16 million in counterfeit hundred-dollar bills are pictured in Battambang September 30,Andrew RC Marshall
(Adds details on dollar, sterling contracts, analyst comments, table, byline)
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 7 (Reuters) - Speculators lifted favorable dollar bets for a second straight week, with net longs hitting their highest in roughly two months, as investors priced in an interest rate hike by the Federal Reserve after the release of upbeat U.S. data this week.
The value of the dollar's net long position rose to $10.52 billion in the week ended Oct. 4 from $9.71 billion the previous week, according to Reuters calculations and data from the Commodity Futures Trading Commission released on Friday. This was the highest since the week of August 9.
The dollar has garnered support from recent U.S. reports that showed strength in manufacturing and a rise in consumer confidence.
Friday's U.S. non-farm payrolls report for September was slightly weaker-than-expected, but it was viewed as strong enough to keep the Fed on track to raise rates in December.
So far this year, the dollar index was still down 2.1 percent on Friday after gains of more than 9 percent in 2015.
"The combination of strong underlying inflationary pressures and waning oil price base effects means the Fed could find itself significantly behind the curve at the turn of the year - so much so that there may be upside risks to the current dot-plot projection of three hikes by end-2017," said Viraj Patel, FX strategist at ING Wholesale Banking in London.
Patel said the prospect for more rate hikes next year should keep the dollar supported against low-yielding G10 currencies in the near term.
Sterling net short positions hit another record high of 97,572 contracts, data showed.
Friday's flash crash which pushed sterling to another 31-year low was yet another reminder of the British currency's vulnerability.
The pound plunged on growing worries Britain would opt for a "hard" exit from the European Union. Sterling so far this year has lost nearly 19 percent of its value.
"It is important to note that the big picture has been sterling negative for many months when viewed from the (flows) perspective of global money managers," said Samarjit Shankar, global markets strategist, at BNY Mellon in Boston.
"We have been highlighting the steady outflows from the beleaguered currency over the past year."
The Reuters calculation for the aggregate U.S. dollar position is derived from net positions of International Monetary Market speculators in the yen, euro, sterling, Swiss franc and Canadian and Australian dollars.
Japanese Yen (Contracts of 12,500,000 yen) $-8.346 billion
04 Oct 2016 Prior week
week Long 101,986 97,432 Short 33,291 28,540 Net 68,695 68,892
EURO (Contracts of 125,000 euros) $11.49 billion
04 Oct 2016 Prior week
week Long 105,634 100,492 Short 187,693 176,522 Net -82,059 -76,030
POUND STERLING (Contracts of 62,500 pounds sterling) $7.761 billion
04 Oct 2016 Prior week
week Long 56,760 48,177 Short 154,332 135,891 Net -97,572 -87,714
SWISS FRANC (Contracts of 125,000 Swiss francs) $0.375 billion
04 Oct 2016 Prior week
week Long 19,293 12,803 Short 22,229 18,759 Net -2,936 -5,956
CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars) $1.067 billion
04 Oct 2016 Prior week
week Long 32,585 34,579 Short 46,662 46,194 Net -14,077 -11,615
AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars) $-1.824 billion
04 Oct 2016 Prior week
week Long 73,545 62,892 Short 49,607 47,884 Net 23,938 15,008
MEXICAN PESO (Contracts of 500,000 pesos) $2.223 billion
04 Oct 2016 Prior week
week Long 22,358 24,865 Short 108,250 110,738 Net -85,892 -85,873
NEW ZEALAND DOLLAR (Contracts of 100,000 New Zealand dollars) $0.564 billion
04 Oct 2016 Prior week
week Long 32,224 34,159 Short 40,054 40,952 Net -7,830 -6,793
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Meredith Mazzilli and Richard Chang) ((gertrude.chavez@thomsonreuters.com; 646-223-6322; Reuters Messaging: rm://gertrude.chavez.reuters.com@reuters.net))
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 7 (Reuters) - Speculators lifted favorable dollar bets for a second straight week, with net longs hitting their highest in roughly two months, as investors priced in an interest rate hike by the Federal Reserve after the release of upbeat U.S. data this week.
The value of the dollar's net long position rose to $10.52 billion in the week ended Oct. 4 from $9.71 billion the previous week, according to Reuters calculations and data from the Commodity Futures Trading Commission released on Friday. This was the highest since the week of August 9.
The dollar has garnered support from recent U.S. reports that showed strength in manufacturing and a rise in consumer confidence.
Friday's U.S. non-farm payrolls report for September was slightly weaker-than-expected, but it was viewed as strong enough to keep the Fed on track to raise rates in December.
So far this year, the dollar index was still down 2.1 percent on Friday after gains of more than 9 percent in 2015.
"The combination of strong underlying inflationary pressures and waning oil price base effects means the Fed could find itself significantly behind the curve at the turn of the year - so much so that there may be upside risks to the current dot-plot projection of three hikes by end-2017," said Viraj Patel, FX strategist at ING Wholesale Banking in London.
Patel said the prospect for more rate hikes next year should keep the dollar supported against low-yielding G10 currencies in the near term.
Sterling net short positions hit another record high of 97,572 contracts, data showed.
Friday's flash crash which pushed sterling to another 31-year low was yet another reminder of the British currency's vulnerability.
The pound plunged on growing worries Britain would opt for a "hard" exit from the European Union. Sterling so far this year has lost nearly 19 percent of its value.
"It is important to note that the big picture has been sterling negative for many months when viewed from the (flows) perspective of global money managers," said Samarjit Shankar, global markets strategist, at BNY Mellon in Boston.
"We have been highlighting the steady outflows from the beleaguered currency over the past year."
The Reuters calculation for the aggregate U.S. dollar position is derived from net positions of International Monetary Market speculators in the yen, euro, sterling, Swiss franc and Canadian and Australian dollars.
Japanese Yen (Contracts of 12,500,000 yen) $-8.346 billion
04 Oct 2016 Prior week
week Long 101,986 97,432 Short 33,291 28,540 Net 68,695 68,892
EURO (Contracts of 125,000 euros) $11.49 billion
04 Oct 2016 Prior week
week Long 105,634 100,492 Short 187,693 176,522 Net -82,059 -76,030
POUND STERLING (Contracts of 62,500 pounds sterling) $7.761 billion
04 Oct 2016 Prior week
week Long 56,760 48,177 Short 154,332 135,891 Net -97,572 -87,714
SWISS FRANC (Contracts of 125,000 Swiss francs) $0.375 billion
04 Oct 2016 Prior week
week Long 19,293 12,803 Short 22,229 18,759 Net -2,936 -5,956
CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars) $1.067 billion
04 Oct 2016 Prior week
week Long 32,585 34,579 Short 46,662 46,194 Net -14,077 -11,615
AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars) $-1.824 billion
04 Oct 2016 Prior week
week Long 73,545 62,892 Short 49,607 47,884 Net 23,938 15,008
MEXICAN PESO (Contracts of 500,000 pesos) $2.223 billion
04 Oct 2016 Prior week
week Long 22,358 24,865 Short 108,250 110,738 Net -85,892 -85,873
NEW ZEALAND DOLLAR (Contracts of 100,000 New Zealand dollars) $0.564 billion
04 Oct 2016 Prior week
week Long 32,224 34,159 Short 40,054 40,952 Net -7,830 -6,793
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Meredith Mazzilli and Richard Chang) ((gertrude.chavez@thomsonreuters.com; 646-223-6322; Reuters Messaging: rm://gertrude.chavez.reuters.com@reuters.net))
