Net Shorts In USD Stayed As Driven By Rallies In Trade Good Currencies

This IMM data report covers the 4-week period from May 19-June 16. During the period, USD experienced huge volatility as the dollar index plunged to 6-month low of 78.3 in early June before rebounding above 80 amid speculations on earlier increase in Fed funds rate. The index dropped around -2% during the period, and net speculative short positions on aggregate USD rose modestly by $2 billion.

Speculative investors returned to net short positions in Japanese after recording a modest net long position last month. During the period, the dollar rebounded against the and briefly rose above 98 level as driven by strong economic data released in the US.

Net longs in Euro merely gained 235 during the period, compared with a strong 10K increase in April. Although the euro rose above 1.4 in the first week of June, subsequent retreat made erased much gain by the single currency. Despite the risk of further invention by SNB on Swiss Franc, net long positions increased from the previous month.

Interestingly, despite a more than +5% rally in the sterling, speculative positions remained net short, though the magnitude was reduced from previous months. Therefore, we believe some of the rise in GBP was driven by short-covering.

Speculative investors remained net long the commodity currencies. While net longs in Australian dollar continued outperformed than that of New Zealand and Canadian dollars, the latter 2 surged by almost 3 times during the period, indicating traders’ bullish sentiment on these currencies as well as commodity prices. However, positions at current levels have become a bit crowded which may increase near-term volatility in these currencies.

IMM Positioning

Based on ActionForex.com Technical Outlook

	Number of Contracts			USD Billion
	16-Jun	19-May	Change	16-Jun	19-May	Change
USD*				-6.45	-4.84	-1.61
JPY	-8563	6000	-14563	-1.11	0.78	-1.89
EUR	12485	12250	235	2.16	2.09	0.07
GBP	-8474	-25928	17454	-0.87	-2.51	1.64
CHF	7902	4609	3293	0.91	0.52	0.39
AUD	32203	29295	2908	2.55	2.27	0.29
NZD	15460	6819	8641	0.97	0.41	0.56
CAD	15460	5425	10035	1.36	0.47	0.89
MXN	12741	21129	-8388	0.47	0.82	-0.34