IFC Markets - Analytics

    IFC Markets

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    USD Net Longs Rise Following European Central Bank Comments

    US dollar net long position rose from $13.32 billion in the previous week to $21.6 billion against the major currencies according to the report of the Commodity Futures Trading Commission (CFTC) covering data up to October 27. After declining for three straight weeks net long bets on US dollar rose sharply last week following dovish comments from European Central Bank. As is evident from the Sentiment table, the sentiment improved for all major currencies except for the euro, Japanese yen and British Pound. All major currencies are held net short against the dollar except for the British Pound and Swiss franc which have built relatively small net long positions of $396 million and $190 million respectively.

    The euro sentiment deteriorated significantly after the ECB President Mario Draghi said on October 22 that the central bank was considering expanding the monetary stimulus program. The net short bets in euro jumped $5.7bn to $14.6bn, with euro’s share rising to 67.5% of long US dollar position. The euro net short position rose as investors increased short contracts by 37428 while they reduced long bets by 5940 contracts. The Japanese yen sentiment also turned bearish after recording the smallest net short position in three years following improvement in sentiment the previous week. The net short position in yen widened $3.1bn to $3.5bn. Investors increased the gross shorts and cut gross longs. The sentiment reversed also for the British Pound with the net long position narrowing $332 million to $396 million. Investors cut both gross longs and gross shorts.

    The Canadian dollar sentiment continued to improve with the net short position narrowing $0.66bn to $1.4bn. Investors covered shorts as they increased gross longs. The sentiment toward the Australian dollar also reversed as it turned bullish with net short bets narrowing by $0.1bn to $2.6bn. Investors cut gross shorts and increased gross longs. Swiss franc sentiment continued to improve with the net long position widening $108 million to $190 million. Investors increased both the gross longs and the gross shorts.

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