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By Gertrude Chavez-Dreyfuss
Aug 4 (Reuters) - Speculators boosted their net short bets on the U.S. dollar this week to the largest since the mid-May 2016 amid political tensions in Washington and diminished expectations of accelerated rate hikes by the Federal Reserve.
The value of net short dollar bets rose to $5.32 billion in the week ended Aug. 1 from $3.92 billion the previous week, according to calculations by Reuters and Commodity Futures Trading Commission data released on Friday.
Speculators were net short dollars for a third straight week.
"We have moved to a dollar appreciation phase to a dollar depreciation phase," said Richard Benson, co-head of portfolio investments at Millennium Global Investments in London.
"There is meaningful room for the depreciation to occur because the dollar is still overvalued against most currencies," Benson added saying that it has been difficult for investors to hold on to greenbacks.
In a wider measure of dollar positioning that includes net contracts on the New Zealand dollar, Mexican peso, Brazilian real and Russian ruble, the U.S. dollar posted a net short position valued at $11.09 billion, the largest since January 2013 NETUSDALL= , up from $9.55 billion a week earlier.
The dollar index .DXY is down nearly 9 percent so far this year, on track for its worst annual performance in 14 years.
A strong U.S. non-farm payrolls report for July supported the dollar on Friday, but a less-than-stellar rally against the yen suggested that investors were not convinced another rate hike was warranted, said Kathy Lien, managing director of FX strategy at BK Asset Management in New York. FRX/
Speculators, meanwhile, also raised net long bets on the Canadian dollar, also called the loonie, and Mexican peso. Long bets on the loonie rose to their highest since January 2013, while those on the Mexican peso hit their largest since May 2013, data showed.
The Canadian dollar had soared about 10 percent since May due to a weaker greenback and strong economic data that spurred the Bank of Canada to raise rates last month.
The Reuters calculation for the aggregate U.S. dollar position is derived from net positions of International Monetary Market speculators in the yen, euro, British pound, Swiss franc and Canadian and Australian dollars. Japanese Yen (Contracts of 12,500,000 yen) $12.709 billion
Aug. 1, 2017 Prior week
week
Long
36,445
28,018 Short
148,641
149,507 Net
-112,196
-121,489 EURO (Contracts of 125,000 euros) $-12.19 billion
Aug. 1, 2017 Prior week
week
Long
191,477
197,656 Short
108,840
106,814 Net
82,637
90,842 POUND STERLING (Contracts of 62,500 pounds sterling) $2.43 billion
Aug. 1, 2017
Prior week
week
Long
58,857
52,152 Short
88,309
78,349 Net
-29,452
-26,197 SWISS FRANC (Contracts of 125,000 Swiss francs) $-0.186 billion
Aug. 1, 2017
Prior week
week
Long
13,536
14,893 Short
12,096
16,443 Net
1,440
-1,550 CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars) $-3.242 billion
Aug. 1, 2017
Prior week
week
Long
82,885
70,385 Short
42,247
43,772 Net
40,638
26,613 AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars) $-4.837 billion
Aug. 1, 2017
Prior week
week
Long
85,280
80,799 Short
24,567
24,425 Net
60,713
56,374 MEXICAN PESO (Contracts of 500,000 pesos) $-3.174 billion
Aug. 1, 2017
Prior week
week
Long
130,186
130,075 Short
16,637
17,185 Net
113,549
112,890 NEW ZEALAND DOLLAR (Contracts of 100,000 New Zealand dollars) $-2.608 billion
Aug. 1, 2017
Prior week
week
Long
41,531
41,221 Short
6,593
6,416 Net
34,938
34,805