IFC Markets - Analytics

    IFC Markets

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    USD Bullish Sentiment Moderates As Net Shorts of All Major Currencies Decline Except for EUR

    According to Commodity Futures Trading Commission (CFTC) covering data up to March 31 the US dollar net long positions declined from $43.86 billion to $40.38 billion the previous week against the major currencies. As is evident from the CFTC Sentiment table the sentiment improved toward every other major currency except the euro. The major event that explains the decline in aggregate long US dollar position is the drop in durable goods orders in February (released on March 25), which signals that the US economy slowed in the first quarter. Another notable change is the improved sentiment toward the Swiss franc, which is again the only currency held net long against US dollar while every other currency is still held net short against the US dollar. Euro extended its net short position to -$30.4bn. The widening of euro net short position continued at a markedly slower pace of $0.26bn compared to $4.5bn increase in net shorts the previous week, which is understandable in light of improved euro-zone economic confidence on the backdrop of continuing quantitative easing of the European Central Bank. Investors pared back risk toward euro by decreasing both gross long and short positions. Euro still makes the bulk of net short positions against US dollar. The sentiment towards Japanese yen improved at a faster pace. The $2.3bn decline in Japanese yen net shorts is the steepest as investors increased gross longs and covered shorts. The yen net short bets at -$2.49bn are now only the third highest among the major currencies. Investors pared back risk in British Pound, narrowed net short positions by $0.18bn with Pound net short bets at -$3.39bn now the second highest among the major currencies. The improvement in sentiment towards Australian dollar and Canadian dollar resulted in narrowing of their net short positions by $0.38bn and $0.28bn to -$1.85bn and -$2.34bn respectively.

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