Dollar longs extended – Deutsche Bank

Research Team at Deutsche Bank, notes that the IMM data show that the aggregate USD positioning has gained momentum over the past week, after slowing for two consecutive weeks.

Key Quotes

“Implied USD longs as a fraction of open interest inched up to 10.7% from 9.4% in the past week. Risk sentiment has improved considerably over the week as the safe haven currencies JPY and CHF have been sold against the US dollar.

Similarly, bearish sentiment in both EUR and GBP rose noticeably. Investors ramped up their bullish positioning in some of the dollar bloc currencies. AUD and CAD witnessed extensions in net longs. By contrast, positioning in NZD flipped to net longs from net shorts. Elsewhere, sentiment in MXN improved modestly as net short were pared.

Traders in Financial Futures data show that leveraged funds have increased their implied dollar longs significantly, whereas asset managers have pared theirs considerably. Leveraged fund remain bearish on EUR and GBP as large amount of net shorts were added. However, asset managers were more sanguine and and added a decent amount of net longs in EUR whilst trimming net shorts in GBP. Both communities added a small amount of net shorts in CHF to extend their bearish positioning modestly. In JPY, leveraged funds marginally added net longs, while asset managers added net shorts.

Sentiment in the dollar bloc currencies improved as leveraged funds added a substantial amount of net longs in AUD, modest amount of net longs in NZD, and decent amount of net longs in CAD to switch its positioning to the bullish territory. Similarly, the asset managers improved their overall sentiment in the antipodeans.

In terms of MXN, investors showed some contrasting behavior with the leveraged funds adding decent amount of net longs and the asset managers adding net shorts.”