(MENAFN- DailyFX)
, , , COT Report –Analysis
- Shorts Jump
- Speculators Hold Largest Net Long Since Late 2019
- Safe-Havens Remain Out of Favour
US Dollar Selling Persists, CAD Bulls Largest Since Late 2019 - COT Report
In the week to May 11th and heading into the US inflation data, investors had continued to sell the US Dollar with net shorts growing by $3bln, to total $15.6bln. This may have also in part explained the brief spike following the higher than expected inflation figures with the move likely exacerbated by a short squeeze (next week’s data will highlight if this was the case). That said, with the Fed continuing to look through inflation spikes and seemingly more focused on the jobs market, which disappointed expectations, higher inflation is likely to result in real rates deeper in negative territory and thus weigh on the greenback.
A large bulk of the USD selling had stemmed from inflows into both the Canadian Dollar and . Speculative positioning looks to have jumped onto the bullish CAD trend, which started after the BoC’s hawkish pivot. Net longs in the Loonie grew by $1bln (5.9% OI) during the reporting week, following another sizeable increase in outright longs and thus speculators are the most bullish on CAD since late 2019. That being said, there is a slight cause for concern with spot CAD overshooting the moves seen in both and US/CA bond spreads, therefore, should rollover, USD/CAD is at risk of a reversal.
Elsewhere, the Pound saw a modest bout of buying as GBP had been underpinned by reduced political tail risks after the SNP failed to gain a majority at the Scottish Election. The outlook remains constructive for the Pound with the 1.40 handle remaining a key level for dip buyers to re-emerge.
Safe-havens remained out of favour as and net shorts grew with the latter seeing more aggressive selling. The Swiss Franc’s flip to net short had been primarily driven by leveraged funds, which in turn, given the improvements in the Area sees risks tilted to the upside. Analyst pick on EUR/CHF ( )
Weekly FX Positioning
Source: CFTC, DailyFX (Covers up to May 11th, released May 14th)
US Dollar Positioning
Source: Refinitiv, DailyFX
USD/CAD Positioning
GBP/USD Positioning
Source: Refinitiv, DailyFX
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