USD long positions reduced, EUR shorts cut - ANZ

The research team at ANZ points out that according to the CFTC positioning data for the week ending 30 May 2017, leveraged funds were net sellers of USD for the second consecutive week. 

Key Quotes

“Overall net long USD positions were reduced by USD1.3bn to USD11.9bn. Positioning on the ICE US Dollar Index, which is directly tied to the DXY Index, has been declining for seven consecutive weeks. This is a better indication of USD sentiment. Given the weaker than expected US payrolls print post the CFTC cut-off date, another week of dollar selling looks likely.”

“Most of the dollar selling was against the EUR. Funds reduced their overall net EUR short positions by USD1.4bn to USD0.2bn, the lowest since May 2014. ECB President Draghi’s comments on not relaxing stimulus just yet, has not thwarted leveraged funds from almost completely squaring up their net short EUR positions.”

“After six consecutive weeks of buying, funds finally turned net sellers of GBP, possibly in response to opinion polls showing a tightening race in the UK’s 8 June general election. Funds reduced their net short GBP positions by USD0.3bn to USD0.4bn.”

“JPY continued to see net selling for the fifth straight week. Funds increased their overall net short JPY positions by USD0.4bn to USD3.2bn.”

“Funds turned net buyers of commodity currencies for the first time in six weeks. All three commodity currencies saw net buying in the week, the first time in 12 weeks. Overall short positions continued to be maintained, but were reduced by USD0.1bn for CAD, and USD0.2bn each for AUD and NZD.”

“EM currency buying picked up during the week, led by MXN ahead of the Mexico state elections (see Figure 14). Funds added USD0.6bn to take net MXN longs to USD1.7bn. Meanwhile, BRL and RUB saw little change in positioning.”

“Net long 10 year UST positions were reduced from the previous week’s record highs. Net long crude oil and gold positions picked up for the second consecutive week.”