Bullish Bets on USD Hit Eight Month High

Bullish bets on US dollar jumped from $33.6 billion in the previous week to $40.9 billion against the major currencies currencies according to the report of the Commodity Futures Trading Commission (CFTC) covering data up to November 17. Strong US economic data, particularly higher than expected year-on-year inflation of 0.2% in October after no rise in consumer prices the previous month, as well as several statements by Federal Reserve policy makers on their inclination to raise the interest rates in December boosted the US dollar with net longs hitting eight month high. As is evident from the Sentiment table, the sentiment deteriorated for all major currencies and all of them are still held net short against the dollar.

The euro sentiment deteriorated at a record pace as economic data indicated euro-zone inflation in October fell to 0.1% month-on-month from 0.2% the previous month. Failure of the monetary stimulus program of European Central Bank to push inflation up to 2% target level has built investor expectations that ECB will opt to expand its stimulus program at its next meeting in December. The build in net short bets in euro almost quadrupled compared to previous week, widening by $2.6bn to $21.8bn. With further considerable increases in net short bets of other major currencies against the dollar euro’s share fell to about 53% of long US dollar position. The euro net short position rose as investors increased short contracts by 21142 and reduced the long bets by 96 contracts. The Japanese yen sentiment deteriorated at a slower pace with the net short position in yen reaching $7.9bn as it widened $1.1bn, about half as much as last week. Investors increased the gross shorts by 11117 contracts and cut the gross longs by 606. The sentiment continued to deteriorate at a lower pace for British Pound also with the net short position widening $0.9bn to $2.4bn. Investors increased gross shorts and cut gross long contracts.

The bearish Canadian dollar sentiment intensified with the net short position widening $0.7bn to $2.1bn. Investors increased gross shorts and cut gross longs. The sentiment toward the Australian dollar deteriorated roughly at previous week’s pace with net short bets widening by $1.0bn to $4.7bn. Investors increased the gross shorts and cut gross longs. The bearish sentiment towards the Swiss franc increased with the net short position widening by $0.7bn to $1.8bn. Investors increased both the gross shorts and gross longs.