Net Short Positions In USD Tripled In 5 Weeks As Investors Fled To Japanese Yen And Euro

Special Reports | Written by ActionForex.com | Jul 27 09 08:04 GMT |

This IMM data report covers the 5-week period from June 16 to July 21. Aggregate USD net short positions jumped to -$18B in the week ended July 21, almost tripled from our last report 5 weeks ago. The current level is also the biggest seen since July 2008 as driven by substantial increase in net long positions in the Euro. Net speculative long positions in Euro surged 22287 contracts to 34772 during the 5-week period. However, most of the gains were recorded last week (net long jumped from 13899 in the week ended July 14 to 34772 in the week ended July 21) when the euro rallied to 7-week high against USD. Net long positions in Swiss Franc also gained 5295 to 13197 contracts. Given the threat of SNB's intervention, the increase has been impressive. In the near- to medium-term, we are neutral on the currency as the SNB will strive to keep it at desired ranges which are above 1 and 1.5 for USDCHF and EURCHF, respectively. Over the past 3 weeks, investors have been building net long positions in Japanese yen. Although the pace has moderated, current position at 36188 is the highest since February 2009. Concerning commodity currencies, significant net longs positions continued to be seen in Australian dollar. During the period, AUD rose +3.85 against the dollar, currently trading at 0.822, the currency pair is approaching the peak formed on May 31 and there's high chance of breaking it. AUD continued to be the biggest long positions in IMM. CAD also added 1046 contracts in net longs during the period. In fact, we saw investors trimming their net long positions on weekly basis from June 16 to July 14. It's was probably driven by correction in Canadian dollar during the period. However, positions were almost 3-folded last week on broad-based weakness in the dollar. The British pound remained in net shorts. However, the degree has been trimmed. Deterioration in budget deficit, the BOE's QE policy and the high uncertainty in the monetary policy outlook remained negative for GBP, making it a currency that many investors want to short.