USD longs reduced, JPY shorts added - ANZ

Analysts at ANZ note that leveraged funds were net USD sellers for the eighth consecutive week, further reducing their net long USD positions by USD1.6bn to USD3bn, according to the CFTC positioning data for the week ending 11 July 2017.

Key Quotes

“This brought the overall net USD longs to their lowest since May 2016. Meanwhile, net long ICE USD positions, which mirror the DXY, were at a three-year low. With dovish remarks from Fed Chair Yellen and weak CPI and retail sales prints last week, long USD positions are likely to have retreated further.”

“Dollar selling was broad based against the G10 currencies except the JPY. Leveraged funds increased their net short JPY positions for the third consecutive week by USD3.6bn to USD7.9bn, the highest net shorts since December 2015.”

“Funds were most bullish on commodity currencies. This was led by CAD where funds reduced their net CAD shorts by USD2.3bn to USD0.7bn, in the run-up to the Bank of Canada’s meeting on 12 July.  Short CAD positions are likely to have been pared back further as the BoC delivered a hawkish hike. Meanwhile, AUD and NZD saw further net buying of USD0.5bn and USD0.1bn respectively, taking their net long positions to USD2.9bn and USD2.3bn.”

“Funds unwound their net short EUR positions by USD1.4bn to turn net long ahead of the upcoming ECB meeting. With this, funds were net long in the EUR by USD0.1bn, the first time in four weeks.  Reflecting broad USD weakness, funds also reduced their net short GBP positions by USD0.7bn to USD0.6bn, the lowest in six weeks.”

“EM currencies had a mixed run. While MXN longs were increased further by USD0.4bn, net BRL and RUB longs were cut by USD0.1bn each.”

“Fund positioning on crude oil and gold diverged for the third straight week. Net crude oil longs were increased for the third straight week while net long gold contracts saw a fifth consecutive week of reduction. Meanwhile, net long 10-year UST positions were cut for the third successive week, as yields continued to head higher.”

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