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By Gertrude Chavez-Dreyfuss and Saqib Iqbal Ahmed
NEW YORK, Feb 23 (Reuters) - Speculators' net short dollar bets slipped to a seven-week low this week, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday, as investors priced in more interest rate increases by the Federal Reserve.
The value of the net short dollar positions, was $8.17 billion in the week to Feb. 20, compared with net shorts of $8.19 billion the previous week. Net short positioning on the greenback has declined for three straight weeks.
U.S. dollar positioning was derived from net contracts of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars.
To be short a currency means traders believe it will fall in value.
In a broader measure of dollar positioning that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real, and Russian rouble, the U.S. dollar posted a net short position valued at $11.62 billion, down from $12.03 billion the week before.
The prospect of further interest rate increases than what the market has priced in has bolstered the dollar over the last few weeks. Concerns about rising inflation after a prolonged period of stagnant price gains have raised the possibility that the Fed could tighten more than expected this year and the next, an expectation that has boosted yields and lifted the dollar.
"Higher U.S. yields are an argument in favor of investing in the U.S. currency, in particular as yields in Europe and Japan remain stuck in negative territory," said Ulrich Leuchtmann, an analyst at Commerzbank in a research note.
"In other words: the bargain prices of U.S. bonds are a buffer against possible dollar weakness and thus make the dollar more attractive."
The dollar index though was still down 2.4 percent so far this year, after losses of nearly 10 percent in 2017.
Meanwhile, speculators' net short position on bitcoin Cboe futures fell to 1,608 contracts, down from a net short position of 1,875 contracts in the prior week, the data showed.
Mirroring the dollar's net positioning, bitcoin's net short contracts fell for a third straight week.
Bitcoin has recovered after hitting its lowest rate this year below $6,000, as investors bought it back as they prepare for a rally that would take the digital currency to even higher levels.The original cryptocurrency gained more than 1,300 percent last year, capped by a lifetime peak just shy of $20,000 on Dec. 17.
Japanese Yen (Contracts of 12,500,000 yen) $12.62 billion
20 Feb 2018Prior week
week Long 45,63442,299Short 153,972 157,808Net-108,338-115,509 EURO (Contracts of 125,000 euros)$-19.449 billion
20 Feb 2018Prior week
week Long229,273 230,785Short 103,147 103,496Net 126,126 127,289 POUND STERLING (Contracts of 62,500 pounds sterling)$-0.682 billion
20 Feb 2018 Prior week
week Long 57,953 64,164Short50,150 49,224Net 7,803 14,940 SWISS FRANC (Contracts of 125,000 Swiss francs)$2.108 billion
20 Feb 2018 Prior week
week Long 17,063 17,763Short32,851 37,688Net -15,788-19,925 CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars)$-1.829 billion
20 Feb 2018 Prior week
week Long 49,373 62,535Short26,246 30,006Net23,127 32,529 AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars)$-0.936 billion
20 Feb 2018 Prior week
week Long 47,170 49,208Short35,295 40,127Net11,8759,081 MEXICAN PESO (Contracts of 500,000 pesos)$-2.535 billion
20 Feb 2018 Prior week
week Long127,065122,762Short32,244 25,984Net94,821 96,778 NEW ZEALAND DOLLAR (Contracts of 100,000 New Zealand dollars)$-0.069 billion
20 Feb 2018 Prior week
week Long 29,422 28,648Short28,478 26,428Net 9442,220(Reporting by Gertrude Chavez-Dreyfuss and Saqib Igbal Ahmed; Editing by Jonathan Oatis)
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