USD Net Longs Decline to Two Month Low

The latest report by Commodity Futures Trading Commission (CFTC) covering data up to February 24 showed that investors decreased their net long position on the US dollar from $42.04 billion the previous week to $40.8 billion, the lowest level in more than two months. This is the third straight week the net dollar longs declined. As is evident from the CFTC Sentiment table every currency is still held net short against the USD, which is understandable in light of divergent monetary policies with the Federal Reserve remaining the only central bank planning an interest rate hike sometime this year.

The EUR bearish sentiment moderated further as improved performance of euro zone economy, driven by German powerhouse, and the deal on Greek bailout extension improved EUR outlook. Net EUR short contracts fell and EUR net short positions stood at -$25bn after declining $1.3bn in a week. The fall in net short positions was the result of decline in both gross long and short positions as investors reduced exposure to EUR. The bearish sentiment continued to moderate for GBP and JPY. In a contrast from previous week, bearish sentiment moderated also for CHF, with net short CHF positions narrowing to -$0.67bn from -$0.8bn previous week.

The JPY net short positions narrowed $0.15bn with net short bets in JPY still the second highest among the major currencies at -$5.0bn. The GBP net short positions declined by $0.65 bn to -$2.11bn, as investors built their gross long positions and cut their gross short bets, reflecting improving sentiment toward GBP.

Investors extended their net short bets in AUD and CAD, which grew substantially by $0.7bn and $0.25bn to -$4.94bn and -$2.9bn respectively, reflecting increasing bearish sentiment toward AUD and CAD on the backdrop of falling commodity prices and dovish stances adopted by the central banks of commodity currencies.