USD Bullish Sentiment Moderates Further

The report of The Commodity Futures Trading Commission (CFTC) covering data up to April 28 showed that the net long US dollar position fell to $34.75 billion from $37.87, hitting the lowest level since September 2014. Investors reduced positive bets on the US dollar for the fifth week in a row. As is evident from the Sentiment table, the broad based improvement in sentiment toward major currencies continued and the reduction in euro’s net short bets contributed the most to the decline of US net long position, while only the British Pound net short position increased. The Swiss franc is still the only currency held net long against US dollar with every other currency held net short against the US dollar.

The euro bearish sentiment moderated as net short position narrowed $1.7bn to $27.1bn, with euro still comprising the bulk of net short positions against US dollar. The narrowing of euro net short position resulted mainly from short covering while investors increased also gross long positions for the third week in a row.

The Japanese yen net short position narrowed $0.9bn to $0.58bn, led by short covering as investors reduced also gross long positions. If the current trend of improvement in sentiment toward the Japanese yen continues the yen may soon become the second major currency held long against the dollar. The British pound net short bets widened $0.5bn to $3.27bn as investors increased gross shorts and reduced gross long positions. Net short bets in British pound are still the second highest among the major currencies.

The sentiment towards Australian dollar and Canadian dollar continued to improve as both currencies narrowed their net short positions by $0.47bn to $2.2bn and $1.74bn respectively. The Australian dollar net short bets remain the third highest against the US dollar as investors covered shorts and reduced gross long positions. The narrowing of Canadian dollar net short position was also driven by short covering while investors increased slightly gross longs.