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IMMs: dollar shorts jump back above 100,000

Short US dollar positions on the CME’s International Money Market platform rose back above the 100,000 mark last week, according to the latest data from the US Commodity Futures Trading Commission.

The previous week’s improvement in dollar sentiment proved short-lived, as net dollar shorts rose by nearly 20,000 to hit 101,300. That number of shorts is still well below the weaker levels seen before mid-May, however, RBC Capital Markets notes.

The CFTC’s latest Commitment of Traders’ Report, released on July 5, shows a weakening of dollar sentiment among non-commercial US futures traders – even before last Friday’s poor jobs figures were released.

In a strategy note, RBC suggests that trading in IntercontinentalExchange’s benchmark Dollar Index Futures, which track the dollar against a basket of currencies, remains choppy, and has been “directionless” since early May. It charts the value of the index against the number of short dollar positions (see chart).

 US dollar net shorts

 Source: RBC Capital Markets, CFTC, Bloomberg

“Positioning, like prices, seems to be in a period of stasis awaiting a sign on the next directional move in G10 [currencies] before pouncing,” RBC senior currency strategist David Watt reports.

Euro sentiment has improved again, with moderate long positions rising for the third straight week. The euro added more than 10,000 long positions to hit 43,194 – above its two-month average of 39,000.

Elsewhere, sterling shorts rose for the third straight week to hit their highest level since July 2010. RBC charts this activity against the sharp rise in long Australian dollar positions to hit 63,336, suggesting it “reflects the move in GBP/AUD, which pierced support at 1.5141 and then 1.50, hitting new all-time lows”.

The yen maintained its weak net long position, adding 1,000 long positions to hit 14,327 net longs. Among other havens, Swiss franc sentiment declined for the fourth straight week, with net long positions virtually halving to 5,291.

Among emerging-market currencies, Mexican peso longs rose sharply to hit 82,094, after spending three weeks below the 50,000 mark.

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