USD Bullish Sentiment Moderates With Net EUR Shorts Narrowing

The latest report by Commodity Futures Trading Commission (CFTC) covering data up to the February 10 showed that investors reduced their net long position on the US dollar from $46.75 billion the previous week to $44.5 billion against the major currencies. While all the major currencies were held short against USD with the bulk composed of short EUR, there were changes in position holdings that reflect signs of shifting sentiment.

The EUR bearish sentiment has moderated for the first time since mid-December, with the net short narrowing $0.6bn to reach $27.5bn, signaling falling investor confidence to add to EUR bearish bets after they had already priced in the possible negative impact of Greek bailout crisis.

The JPY, GBP and AUD bearish sentiments moderated also. The decrease in net short positions for EUR, JPY, GBP was due to mainly narrowing of gross short positions, indicating that there is some profit taking and that traders didn’t consider the currencies’ odds of further depreciation sufficient for adding to short positions. The GBP net short position is relatively small at $3.68bn and is the fourth biggest after EUR, JPY and AUD. The net short JPY position has narrowed to $5.8bn, a level last seen in late 2012. The CHF net short position increased slightly while investors pared back both long and short positions, indicating that investors still perceive a high degree of uncertainty surrounding the CHF, and chose to further reduce their risk exposure.