USD Net Longs Decline Ahead of Fed Meeting


The report of The Commodity Futures Trading Commission (CFTC) covering data up to June 16 showed the net long US dollar position fell to $23.8 billion from $34.7 billion in the previous week. The reduction in net long bets in US dollars marked a reversal after increases in US long position for three straight weeks. As is evident from the Sentiment table, the sentiment improved for all major currencies except for the Swiss franc. The fall in US dollar net longs ahead of Federal Reserve’s two-day policy meeting shows investors anticipated Fed’s dovish stance over interest rate hike as moderate improvement in US economy performance in prior weeks led to expect the Fed would indicate a slower pace of increases once it hikes rates later in the year. All currencies are held net short and only the Swiss franc is held net long against US dollar.

The euro sentiment continued to improve at much higher pace as net short bets in euro narrowed $6.8bn to $12.5.0bn, with euro comprising 53% of long US dollar position. The euro net short position narrowed as investors increased gross longs and covered shorts.

The Japanese yen sentiment also improved with net short position narrowing $3.5bn to $8.1bn as investors increased gross longs and covered shorts, reversing the trend in changes in the past five weeks. The Japanese yen has still the second highest short bets against US dollar, comprising about 34% of aggregate US dollar long position. The British pound net short bets narrowed $0.23bn to $2.4bn.

The sentiment toward the Canadian dollar improved after deteriorating for two weeks with net short position narrowing $0.1bn to $1.0bn. Investors increased gross longs as they reduced gross short positions. The Australian dollar net short bets narrowed by $0.7bn to $0.3bn as investors covered shorts. The Swiss franc net longs decreased by $0.64 to $0.7bn as investors increased both gross longs and gross shorts.