USD longs reduced, EUR longs surge - ANZ

According to the CFTC positioning data for the week ending 18 July 2017, leveraged funds reduced their net long USD positions by USD2bn to USD1bn, the ninth consecutive week of net selling.

Key Quotes

“If this persists, overall net USD position could turn short for the first time since May 2016. This is in line with the weak dollar price action and the ICE net dollar position ahead of the FOMC meeting on 26 July. Q2 advance GDP reading will also be important to gauge the DXY price movement in the coming week.”

“Dollar selling was broad based against the G10 currencies except the JPY and CHF. Leveraged funds increased their net short JPY positions for the fourth consecutive week by USD1.7bn to USD9.7bn, the highest net shorts since August 2015. Funds also reduced their net CHF longs by USD0.6bn to USD0.5bn.”

“Funds remained bullish on the EUR as the ECB stated it was preparing to pull back its support for the economy. With this, funds added USD1.3bn to take their net long EUR position to USD1.4bn, in line with the strong EUR movement in the week.  Reflecting broad USD weakness, funds also reduced their net short GBP positions by USD0.3bn to USD0.3bn, the second consecutive week of net buying.”

“Commodity currencies saw net buying for the eighth consecutive week. This was led by AUD where funds added USD1.3bn to take their net long AUD position to USD4.2bn. Funds turned net long CAD for the first time since March this year after the BoC delivered a hawkish hike. Meanwhile, funds added USD0.4bn to take their net long NZD position to USD2.7bn, a record high.”

“EM currencies had a bullish run in the week. Net MXN longs were increased further to USD2.9bn, the highest net longs since May 2013. BRL and RUB also saw marginal net buying during the week.”

“Fund positioning on crude oil and gold moved together after three consecutive weeks of divergence. Net crude oil longs were increased for the fourth straight week while net long gold contracts saw a pick up after five consecutive weeks of reduction. Meanwhile, net long 10-year UST positions were cut for the fourth successive week, even as yields saw some modest correction lower.”