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Positive data support US dollar bulls

29/11/2016

The US dollar net long position rose to $22.25 billion from $20.87 billion against the major currencies during the previous week, according to the report of the Commodity Futures Trading Commission (CFTC) covering data up to November 22. Positive economic reports together with expectations of strong fiscal stimulus after Donald Trump's victory supported US dollar bullish sentiment. Retail sales rose 0.8% percent in October with September's gain revised 0.4 percentage points higher to 1.0 %, showing increasing consumer spending which bodes well for fourth quarter GDP.

Data for the housing sector were also positive with building permits up 0.3% after 6.3% increase in September and housing starts jumping 25.5% to an annualized rate of 1.323 million following a 9.5% slump the previous month. Labor market strength was also apparent as initial jobless claims declined unexpectedly to 235000 from 254000 in the previous week, pointing to a strong jobs report for November. The consumer price index also displayed a positive trend with monthly inflation rate rising 0.4% compared with 0.3% in September while the core consumer price index rose 2.1% over year compared with a 2.2% gain in September. However the strong consumption, housing and labor data were balanced by softer production data with industrial production steady in October following a downwardly revised 0.2% decline in September. With the overall picture indicating improved economic recovery investors increased the dollar bullish bets. As is evident from the Sentiment table, sentiment improved for the British Pound, euro and Canadian dollar. And the Japanese yen and Australian dollar remain the two major currencies held net long against the US dollar.

The euro sentiment improved as the net short euro position fell $0.1bn to $15.8bn. Investors increased both the gross longs and shorts by 5547 and 5713 contracts respectively. The British Pound sentiment continued to improve with 1.9% rise in October retail sales far above expectations and the unemployment rate for three months to September 2016 declined to 4.8% from 4.9% in the April to June period. The Pound net shorts narrowed by $0.47bn to $5.77bn. The net short position in British Pound narrowed as investors cut the gross longs and covered shorts by 32 and 6027 contracts respectively. The bullish Japanese yen sentiment deteriorated significantly with the net long position in Japanese yen falling by $1.14bn to $1.22bn. Investors built both the gross longs and shorts by 4098 and 13874 contracts respectively.

The Canadian dollar sentiment improved marginally with the net shorts narrowing by $83 million to $1.3bn against the dollar. Investors cut considerably both the gross longs and shorts. The bullish sentiment deteriorated for the Australian dollar with net longs falling by $0.86bn to $2.27bn. Investors cut both the gross longs and gross shorts. The sentiment toward the Swiss franc continued to deteriorate with the net shorts widening by $62 million to $2.83bn. Investors built both the gross longs and shorts.


CFTC Sentiment vs Exchange Rate

November 22 2016BiasEx RateTrendPosition $ mlnWeekly Change
CADbearishnegative-130083
AUDbullishpositive2272-863
EURbearishpositive-15851125
GBPbearishnegative-5769477
CHFbearishpositive-2832-62
JPYbullishnegative1226-1144
  Total-22254 

commitment of traders net long short

commitment of traders weekly change

market sentiment ratio long short positions

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