USD Net Longs Rise to Four Week High

The report of The Commodity Futures Trading Commission (CFTC) covering data up to June 2 showed the net long US dollar position rose to $34.15 billion from $29.94 billion. Investors increased positive bets on the US dollar for the second week after cutting them for eight weeks in a row. As is evident from the Sentiment table, the sentiment deteriorated for all major currencies except for the euro and the Swiss franc and once again an increase in Japanese yen’s net short bets contributed the most to the rise of US net long position. The sentiment toward the US dollar continued to improve after reports showed continued recovery in housing market evidenced by increase in pending home sales in April at the highest pace in nine years, increase in personal incomes in April, and expansion in manufacturing sector in May. Improved statistics bolstered expectations the Federal Reserve will hike interest rates this year as policy makers had indicated the decision will depend on US economy performance. Another notable change is that the net bets in Canadian and Australian dollars turned negative as bearish sentiment toward commodity currencies strengthened and the Swiss franc is now the only currency held net long against US dollar.

The euro sentiment improved slightly as net short bets on euro narrowed $0.2bn to $23.06bn, with euro comprising the bulk of long US dollar position. The narrowing of euro net short position resulted mainly from increasing gross longs while investors covered shorts.

The deterioration in Japanese yen sentiment continued with net short position widening $2.3bn to $8.63bn as investors reduced gross longs and increased gross short positions for the fourth week in a row. The British pound net short bets didn’t change materially amounting to $2.46bn.

The continued deterioration in sentiment towards commodity currencies resulted in net short bets of $1.03bn for Australian dollar after registering a $0.5bn net long position last week as investors sharply increased gross shorts and cut gross long positions. The sentiment also shifted to bearish for the Canadian dollar as investors increased considerably gross short positions and reduced gross longs, resulting in a net short position of $83 million after a $0.6bn net long position last week. The Swiss franc net longs didn’t change much as they increased by just $28 million as investors increased both gross longs and gross shorts.