October 7, 2016 / 9:27 PM / in 10 months

UPDATE 1-Dollar net longs hit 2-month high; pound shorts at record high -CFTC, Reuters

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(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
    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
    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
 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
 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
 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
 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
 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
 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
 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
 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)

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