IFC Markets - Analytics

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    USD Net Long Slips as Greece Moves Toward Default

    According to the report of The Commodity Futures Trading Commission (CFTC) covering data up to June 30 the US dollar net long position edged lower to $25.12 billion from $26.07 billion in the previous week. Economic reports in US during the week indicated personal income remained unchanged in May, personal spending increased and core personal consumption expenditure price index fell in May over the same period in the previous year while consumer confidence improved in June, providing no clear support for Fed’s pledge to raise the interest rates as economic data improve, and hence failing to provide necessary boost to US dollar. As is evident from the Sentiment table, the sentiment deteriorated for all major currencies except for the British Pound and Japanese yen. All currencies are still held net short and only the Swiss franc is held net long against US dollar.

    The deterioration of euro sentiment moderated, indicating the market discounts the possibility of Greek exit from euro-zone and negative consequences of Greek default after the negotiations broke down and on June 27 Greece’s Prime Minister Alexis Tsipras called for a referendum to vote on bailout terms that international creditors insisted on. The Greek government had indicated it cannot make the IMF loan repayment on June 30, and on June 29 declared bank holidays and imposed capital controls until the referendum on July 5. The net short bets in euro widened $70 million to $13.9bn, with euro comprising 55% of long US dollar position. The euro net short position rose as investors cut both gross longs and gross shorts.

    The Japanese yen sentiment improved with net short position narrowing $0.8bn to $8.0bn as investors increased gross longs and covered shorts. The net shorts bets in Japanese yen remain the second highest short bets against US dollar, accounting for 31% of aggregate US dollar long position. The British pound net short bets narrowed $0.9bn to $1.2bn as investors increased gross longs and covered shorts

    The sentiment toward the Canadian dollar continued to deteriorate with net short position widening $0.4bn to $1.8 bn. Investors increased both gross longs and gross shorts. The Australian dollar net short bets widened further by $0.2bn to $0.9bn as investors reduced gross longs and increased gross shorts. The Swiss franc net longs fell by $29 million to $0.9bn as investors reduced gross longs and covered shorts.

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