Dollar longs at five-month low – Deutsche Bank

Shuaib Chowdhary, Macro Strategist at Deutsche Bank, notes that the investors decreased their bullish sentiment on the US dollar yet again to reach the lowest level since Oct.

Key Quotes

“Implied USD longs as a fraction of open interest fell 1.8% to 17.4%. Speculators extended EUR net shorts by 25% over the past week after unwinding huge amount of shorts in the recent past. Similarly, GBP net shorts were also added to at the margin. Investors reduced risk moderately in the safe haven currencies by trimming their net short positions.”

“Among the dollar bloc currencies, CAD experienced the largest speculative net long position this year and the highest since June, ahead of BoC rate announcement this week. Similarly, investors were highly bullish on AUD after extending their net longs by more than a third. NZD longs were also added to. Meanwhile, net short exposure in MXN was trimmed as investor’s added decent amount of gross longs.” 

“Traders in Financial Futures data show that leveraged funds trimmed their implied dollar longs for the seventh straight week, while asset managers marginally pared their derived USD long exposure. In EUR, leveraged funds were more bearish as their net shorts were extended by 15% over the past week, whereas asset managers increased their bullish exposure modestly. Both the communities expressed contrasting views on GBP as leveraged funds pared their net shorts positions while asset managers added to theirs. Sentiment in the safe haven currencies improved as leveraged funds reduced risk in both JPY and CHF.”

“Meanwhile, asset managers pared JPY net shorts while extending CHF net longs. Outlook for the dollar bloc improved further as leveraged funds increased CAD net longs by a fifth while adding a little less than 15% of net longs in AUD. Meanwhile, asset managers cut CAD net longs whilst increasing their AUD net longs exposure. Sentiment in NZD remained largely unchanged. Elsewhere, in MXN, leveraged funds decreased their net shorts while asset managers increased their net longs modestly.”