Speculators at least made money in forex market trading last week after halving their net long dollar bets ahead of the Federal Reserve meeting.
FX speculators cut their bullish bets on the dollar to USD10.8 billion in the week to Tuesday September 17, the lowest in seven months, from USD22.01 billion the week before, using Commodity Futures Trading Commission released on Friday and one major house calculation. The drop ended three straight weeks of increasing bets on the dollar.
Some of last week's decline was probably driven by the news that former Treasury Secretary Larry Summers was withdrawing from contention for the top job at the Fed given he was seen as more hawkish than the other chief candidate Vice Chair Janet Yellen. But some speculators, whether hedging positions or just going dollar short because the market was too much the other way, undoubtedly made a lot of money in the immediate post Fed decision trading environment.
Note speculators are building euro net long positions with a rise to 31,907 net long contracts from 12,696 net long contracts the week before. The euro is currently the only currency with a significant long position and the increase in positions indicates bullishness is building up, at least on the part of speculators.