IFC Markets - Analytics

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    Bullish bets in US dollar rise at last

    Investors increased bullish bets on US dollar for the first time in ten weeks to $7.4 billion from $5.74 billion against the major currencies in the previous week according to the report of the Commodity Futures Trading Commission (CFTC) covering data up to March 1. The sentiment improved for the US dollar as concerns about US economy starting to slip into recession subsided. The US fourth quarter GDP growth was revised upward to an annualized rate of 1% from a preliminary reading of 0.7%. Other positive statistics were the 4.9% rise in January durable goods orders after a 4.8% fall in December and a 1.5% increase in construction spending. Also the slowing of the pace of contraction in manufacturing activity was viewed as a sign of impending recovery as the ISM manufacturing index at 49.5 in February ( below 50 level indicates contraction) came in higher than the 48.2 reading the previous month. Other data such as increased personal income and spending in January, as well as a 1.7% rise in core personal consumption expenditure index year-over-year in January compared with 1.5% rise in December indicated US economic recovery continues, relieving concerns about the impact of slowing global growth on US economy. As is evident from the Sentiment table, sentiment improved for all major currencies except for the euro and British Pound. And among six major currencies Japanese yen and Australian dollar are still the two currencies held net long against the US dollar.

    The euro sentiment deteriorated during the week with a sharp increase in net short bets. The net short position in euro widened by $2.8bn to $9.3bn. The euro net short position rose as investors reduced the gross long positions by 6404 contracts and increased shorts by 18083. The Japanese yen sentiment improved as investors sought the safety of yen amid continued volatility in financial markets. The net long position in Japanese yen rose at a steady rate of $0.6bn a week to $6.5bn. Investors increased the gross longs by 1694 contracts and cut gross shorts by 5197. Sentiment deteriorated for the British Pound as investors weighed the impact on UK currency of a possible exit of Britain from European Union. The net short position widened by $0.5bn to $3.4bn. Investors increased both the gross longs and shorts.

    The improvement of sentiment for the Canadian dollar continued with the net short position narrowing by $0.4bn to $2.2bn. Net short bets in Canadian dollar are still the third biggest after bearish bets in euro and Pound. Investors covered shorts and cut the gross longs. The bullish sentiment toward the Australian dollar continued to strengthen with the net long position increasing by $0.52bn to $1.2bn. Investors built the gross longs and covered the shorts. The sentiment for the Swiss franc continued to improve with net short bets narrowing by $0.1bn to of $0.18bn. Investors cut both the gross shorts and gross longs.

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    commitment of traders net long short

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    market sentiment ratio long short positions

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