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Foreign Exchange

IMMs: US dollar shorts fall to lowest in 4 months

The US Commodity Futures Trading Commission’s latest Commitments of Traders report has shown a big drop in short positions on the US dollar, based in International Money Market data.

Data for the week May 11-17 shows investors cut short positions on the dollar by a quarter; amid expectations the central bank is set in coming months to slash liquidity provision under its program of quantitative easing.

The number of USD short contracts fell to 236,000 over the week, compared with 310,000 the previous week, and 339,000, a month ago. Net long positions on the euro fell, dropping by a third to 52,000 contracts.

“The fall in dollar shorts supports our view that a modest dollar rebound is likely as the end of June approaches,” said UBS FX strategist Gareth Berry, in a note. “Euro longs have suffered a tremendous reversal in fortune.”

Interestingly, there were 35 leveraged funds that were long the euro and 46 that were short, Citi analysts noted. The longs had average positions of $310 million per account, compared with $207 million at the short funds, which is how the net position remained long.

There were signs of capitulation in the commodity space, Berry said, with Australian dollar longs dropping by 10 percent to an eight week low, while Canadian dollar longs fell by around 15 percent to the lowest level since late 2010.

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