USD Bulls Square Up Election Rally; An Opportunity To Re Establish Long Positions
Data in this report cover up to Tuesday Feb 7 & were released Friday Feb 10.
CFTC data for the week through Feb 3 show FX investors continued to pare exposure to the long USD trade on aggregate, reducing the net bull bet on the big dollar USD1.7bn in the week to USD18.3bn. This is the lowest aggregate bet on USD since mid-October.
Speculative investors have effectively squared up the entirety of the USD rally that developed around and following the US presidential election, which may allow USD bulls an opportunity to re-establish positions as markets refocus on fiscal policy risks.
Positioning changes were spread across the major currencies this week. Investors continued to cover gross short positions in the EUR and JPY contracts especially, however. Net GBP shorts fell modestly, as investors cut both gross long and short positions while the “Brexit bill” worked its way through
Net AUD longs picked up by a similar amount while NZD sentiment remains flat. Net short MXN positions eased modestly (USD99mn), reflecting the recent stabilization in the market, taking the bear bet against the peso to the lowest in two months. 7-Feb.
After a period where CAD bulls and bears battled for control of the market, the CAD bulls appear to have prevailed , with net CAD longs picking up from near flat levels as USD/CAD pressured 1.30. Sentiment here has struggled for a stronger sense of direction since December but the stalled move lower in spot this week may well frustrate CAD bulls again.