UPDATE 1-U.S. dollar net longs drop to lowest since mid-March; yen shorts surge -CFTC, Reuters data

(Adds analyst comment, details, table) By Gertrude Chavez-Dreyfuss NEW YORK, Oct 28 (Reuters) - Speculators' net long positioning on the U.S. dollar dropped to the lowest level since mid-March in the latest week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday. The value of the net long dollar position fell to $8.805 billion in the week ended Oct. 25, from $10.21 billion the previous week, CFTC data showed. Net short positioning on the yen, on the other hand, ballooned to 102,618 contracts, the largest since May. That came after the Japanese authorities likely intervened in markets to stem the slide of the country’s battered currency on Oct. 21, market participants said, following an unexpected jump in the yen against the dollar. The yen fell as low as 151.94 per U.S. dollar, before Japan stepped in and propped it up. The greenback, which has rallied on the back of the Federal Reserve's aggressive tightening, lost ground in the last week as signs of growing U.S. economic weakness fueled speculation that the Fed is likely to slow the pace of rate hikes. For instance, surging mortgage rates have sapped housing demand, with U.S. home prices sinking in August. There are signs of softness on the wage inflation front. The Employment Cost Index, the broadest measure of labor costs, rose 1.2% last quarter after increasing 1.3% in the April-June period, data showed on Friday. The ECI is widely viewed by policymakers and economists as one of the better measures of labor market slack and a predictor of core inflation because it adjusts for composition and job-quality changes. Several Fed officials have also floated the idea of downshifting the pace of rate increases. St. Louis Fed President James Bullard and Minneapolis Fed President Neel Kashkari, both of whom are widely perceived as policy hawks, emphasized the need to stop raising rates in early 2023. For the month of October, the dollar index was down 1.2%, falling for the first time in five months. "A less hawkish monetary trajectory by the Fed, coupled with less assertive rhetoric, would weaken the dollar, and help ease global financial conditions," said Quincy Krosby, chief global strategist for LPL Financial in Charlottesville, Virginia. "The stronger dollar has become a major headwind for S&P 500 multinationals, especially amid a backdrop of weaker global demand." Japanese Yen (Contracts of 12,500,000 yen) $7.9 billion 25 Oct 2022 Prior week week Long 37,579 30,583 Short 140,197 124,919 Net -102,618 -94,336 EURO (Contracts of 125,000 euros) $-5.93 billion 25 Oct 2022 Prior week week Long 226,734 202,703 Short 151,825 154,553 Net 74,909 48,150 POUND STERLING (Contracts of 62,500 pounds sterling) $3.623 billion 25 Oct 2022 Prior week week Long 43,511 40,328 Short 91,316 91,539 Net -47,805 -51,211 SWISS FRANC (Contracts of 125,000 Swiss francs) $0.891 billion 25 Oct 2022 Prior week week Long 5,538 7,052 Short 16,838 14,138 Net -11,300 -7,086 CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars) $1.498 billion 25 Oct 2022 Prior week week Long 35,607 35,384 Short 53,762 55,957 Net -18,155 -20,573 AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars) $2.231 billion 25 Oct 2022 Prior week week Long 32,159 33,046 Short 83,605 68,405 Net -51,446 -35,359 MEXICAN PESO (Contracts of 500,000 pesos) $0.557 billion 25 Oct 2022 Prior week week Long 161,558 133,432 Short 148,984 155,726 Net 12,574 -22,294 NEW ZEALAND DOLLAR (Contracts of 100,000 New Zealand dollars) $1.048 billion 25 Oct 2022 Prior week week Long 15,639 10,328 Short 28,523 28,773 Net -12,884 -18,445 (Reporting by Gertrude Chavez-Dreyfuss in New York Editing by Jonathan Oatis and Matthew Lewis)