USD shorts increased, EUR longs surge - ANZ

According to the positioning data for the week ending 29 August 2017, leveraged funds increased their overall net short USD position to the highest level since May 2014, notes the analysis team at ANZ.

Key Quotes

“The USD1bn of net dollar selling in the week took short positions to USD8bn. The last time short positioning was at this level, the DXY was trading at 80. A weaker than expected August US non-farm payroll release sent the USD lower, but was offset somewhat by strong ISM data. Short dollar positioning is starting to get extreme, so further downside for the USD could be limited.”

“Dollar selling was heavily concentrated against the EUR. Funds increased their net long EUR position by USD1.1bn to USD4.6bn, in line with the EUR’s push above the 1.20 level. We can see some caution emerging as we head towards the ECB meeting on 7 September, as there have been reports that officials are expressing concern over the strength of the EUR.”

“GBP continued to see net selling for the third consecutive week. Funds increased their net short GBP positions by USD0.4bn to USD2.7bn despite a weak dollar. JPY saw marginal buying as funds reduced their net yen short positions for the sixth straight week, while there was marginal selling of CHF.”

“AUD remains in demand with net long positioning rising for the 12th consecutive week to reach its highest level since April 2013. NZD on the other hand, has seen funds reduce their net long contracts for the sixth straight week. CAD positioning was largely unchanged but it is unlikely to stay that way following strong GDP data after the cut-off date.”

“EM currencies saw marginal buying in the week, led primarily by the RUB. While MXN and BRL saw minor selling, funds added USD0.1bn to take their net long RUB positioning to USD0.7bn.”

“Crude oil saw a decline in net long contracts for the fourth consecutive week, as oil prices remained volatile. Net longs in 10 year USTs rose for the second straight week as yields moved lower. Net long gold contracts also rose in the week.”