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Foreign Exchange

IMMs: US dollar shorts rise as euro’s long decline doubted

Short positions on the US dollar rose in the week ending May 31, the US Commodity Futures Trading Commission’s (CFTC) latest Commitments of Traders report shows, based on International Money Market data.

USD net shorts rose from 102,037 contracts on May 24 to 126,029 on May 31, as a gain in the dollar caused by concern over European sovereign debt problems ran out of steam. The move coincided with reports showing that the US economic recovery remains fragile.

Euro net longs increased after a five-week slide, rising to 21,970 contracts, from 19,129 the previous week, the CFTC added. The number of long contracts is still some way below the 99,000 seen in early May.

“According to IMM data, EUR longs have been trimmed by about 75 percent since the beginning of May, taking speculative positioning to the lowest level since January,” said Todd Elmer, an analyst at Citi, in a note. Still, Citi’s own PAIN index showed a much smaller decline in Euro longs, suggesting that the CFTC data might be exaggerating the move out of the currency.

“The tactical implication is that there remains vulnerability for position-paring to weigh on the euro in the days ahead,” Elmer said.

Elsewhere, investors closed out net long positions in the Japanese yen, converting a net long position of 8,006 contracts to a short of 1,648. Sterling short positions declined, but remained short overall at 1,829 contracts, while long positions in the Swiss franc increased to 21,119 contracts, a 10-week high.

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