NEW YORK, Jan 10 (Reuters) - Speculators' net short positioning on the U.S. dollar hit its largest level since last August in the latest week, U.S. Commodity Futures Trading Commission and LSEG data released on Jan. 5.
Reuters was unable to publish the CFTC data last Friday due to an automation failure.
Data showed the value of net short dollar positions rose to minus $10.54 billion for the week ended Jan. 2nd, from $9.05 billion the previous week. U.S. dollar net short positioning rose for a second consecutive week.
U.S. dollar positioning was derived from net contracts of International Monetary Market speculators in the Japanese yen, euro, British pound, Swiss franc, Canadian, Australian and New Zealand dollars, Mexican peso, Brazilian real and Russian rouble.
Net shorts on the U.S. dollar have been underpinned by expectations the Federal Reserve is near the end or at the end of its tightening cycle, with inflation seen continuing its downtrend.
The U.S. rate futures market has priced in a nearly 68% chance of a rate cut in March, according to LSEG's rate probability app. For 2024, traders are betting on about five rate cuts of 25 basis points (bps) each, putting the year-end fed funds rate at nearly 4%.
December CPI data due on Thursday will shed further light on when the Fed could start cutting rates. U.S. producer prices will be released on Friday.
U.S. core CPI is forecast to remain unchanged at 0.3% from the month before, while the year-on-year number is seen rising at a lower-than-expected pace of 3.8% from November, a Reuters poll showed.
In other currencies, net shorts on the yen rose to minus 57,195 contracts in the latest week, compared with minus 55,568 contracts the previous week, which was the smallest net short since March last year.
Japanese data on Tuesday showed that core inflation in Tokyo slowed for the second straight month in December as cost-push price pressures continued to ease, data showed on Tuesday.
Separate data showed household spending fell for the ninth straight month in November, underscoring the fragile nature of Japan's economy.
Cooling of inflation in the capital Tokyo took pressure off the Bank of Japan (BOJ) to rush to raise interest rates.
Expectations for a hawkish policy tweak at the BOJ's next meeting on Jan. 22-23 had diminished by the New Year's Day earthquake in central Japan. At least 168 lives had been lost in the disaster, with more than 300 people still missing.
Euro net long contracts, meanwhile, rose to 119,476 contracts in the latest week.
JAPANESE YEN (Contracts of 12,500,000 yen)
02 Jan 2024 week Prior week Long 33585 37321 Short 90780 92889 Net -57195 -55568 EURO (Contracts of 12,500,000 euros)
02 Jan 2024 week Prior week Long 211912 211195 Short 92436 93804 Net 119476 117391 POUND STERLING (Contracts of 62,500 pounds sterling)
02 Jan 2024 week Prior week Long 61794 58750 Short 46589 44658 Net 15205 14092 SWISS FRANC (Contracts of 125,000 Swiss francs)
02 Jan 2024 week Prior week Long 10734 8422 Short 15949 11867 Net -5215 -3445 CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars)
02 Jan 2024 week Prior week Long 50895 41685 Short 72026 76406 Net -21131 -34721 AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars)
02 Jan 2024 week Prior week Long 44442 39011 Short 87335 90314 Net -42893 -51303 MEXICAN PESO (Contracts of 500,000 pesos)
02 Jan 2024 week Prior week Long 141007 131856 Short 51909 44107 Net 89098 87749 NEW ZEALAND DOLLAR (Contracts of 100,000 New Zealand dollars)
02 Jan 2024 week Prior week Long 18043 14582 Short 18589 18249 Net -546 -3667 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Richard Chang)
