By Georgia Wells
The net amount of investor cash betting against the euro decreased 50% in the past week, helped in part by the launch of a Greek bond buyback plan to help reduce the country's debt burden.
As of Dec. 4, investors had reduced their net short euro bets to $5.4 billion, from $10.8 billion the previous week, marking its smallest amount since September 2011, government data showed Friday.
The euro strengthened nearly 1.2% versus the dollar during the period as Greece launched a plan to retire roughly half the EUR63 billion ($81.6 billion) in debt the country owes to private creditors. The reduced debt burden is part of an agreement with the country's European and international creditors in exchange for releasing fresh aid to Athens.
"Things have been in improving in Europe with the buyback in Greece. The euro has been on an upward trend, so investors [short the euro] cut their losses," said Charles St-Arnaud, a currency strategist at Nomura Securities in New York.
The decline in antieuro bets contributed to a broader move in investor positioning against the U.S. dollar. Traders were net short the dollar this week for the first time since early November.
As of Dec. 4, investors held a net $817.7 million short-dollar position against a basket of currencies. The previous week, investors held a net $6.5 billion long-dollar position.
Meanwhile, investors continued to increase net bets against the yen, which hit a fresh five-year high. As of Dec. 4, investors increased their net short yen position 14% to $13.8 billion from $12.1 billion the previous week.
The CFTC's report tracks investors' positions on the Chicago Mercantile Exchange. Although the bets are only a fraction of global currency trading, they are considered representative of broad trading trends and general market sentiment.
The data are collected at the close of business Tuesday, so the report doesn't reflect Friday's better-than-expected U.S. jobs data.
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