USD Net Longs Rise to Highest Level in Four Months

According to the report of the Commodity Futures Trading Commission (CFTC) covering data up to August 11, the value of US dollar net long position rose to four month high of $37.19 billion from $32.78 billion in the previous week. The nonfarm payroll showed unemployment stayed steady at 5.3% rate and private sector added 215 thousand jobs, a bit less than the expected 223 thousand increase but still above the average 211 thousand pace for the year. The employment growth increases the likelihood of interest rate hike in September as the Fed’s recent policy statement indicated policy makers need to see some further improvement in labor markets for initiating the first rate hike in last ten years. The report contributed to increased bullish bets on dollar. As is evident from the Sentiment table, the sentiment deteriorated for all major currencies and all currencies are held net short against the dollar.

The euro sentiment continued to deteriorate. The net short bets in euro widened $0.5bn to $15.9bn, with euro’s share falling further to about 43% of long US dollar position. The euro net short position rose as investors cut both gross longs and gross shorts.

The Japanese yen sentiment continued to deteriorate at accelerated pace with net short position widening $2.5bn to $10.5bn as investors increased gross shorts and cut gross longs. The Japanese yen still accounts for the second highest short bets against US dollar, further increasing its share of aggregate US dollar long position to 28%. The British pound sentiment deteriorated with net short bets narrowing $0.37bn to $1.0bn with investors cutting gross longs and covering shorts.

The pace of deterioration of Canadian dollar sentiment continued to slow with net short position widening $0.27bn to $5.1bn. Investors cut both gross longs and gross short positions. The Australian dollar sentiment deteriorated as net short bets widened by $98 million to $3.7bn as investors increased gross shorts and cut gross longs. Swiss franc sentiment deteriorated at accelerated pace with the net short position widening $0.7bn to $0.88bn. Investors increased gross shorts while they cut gross longs.