Dollar longs pared, AUD positioning flips to short – Deutsche Bank

Investors continued to liquidate USD longs for a third consecutive week ahead of the FOMC meeting this week, with implied USD longs as a fraction of open interest down from 5.4% to 4.8% notes the analysis team at Deutsche Bank.

Key Quotes

“Investors extended their EUR net longs as gross shorts were pared. By contrast, sentiment in GBP weakened further into the election. Net shorts increased by almost 25% over the week. Investors trimmed their CAD net shorts for yet another week while maintaining their bearish positioning at peak levels. Among the Antipodean currencies, investors turned bearish on AUD for the first time in six months after positioning flipped to net shorts from net longs. By contrast, NZD net shorts were trimmed by more than half. Also worth noting is the fact that investors added to their JPY net shorts to reach the highest level since Feb-2017. CHF shorts were trimmed by one-tenth. Investors continued to build MXN net longs after gross shorts were trimmed significantly.”

“Traders in Financial Futures data show that sentiment in implied dollar longs deteriorated after leveraged funds pared their net longs considerably whereas asset managers trimmed their net shorts marginally. In EUR, investors were more bullish as leveraged funds almost doubled their net longs and asset managers extended their net longs at the margin.”

“GBP bearish positioning was more than doubled by leveraged funds whereas asset managers added moderate net shorts. Among the safe haven currencies, investors were more bearish on JPY as both the communities extended their net shorts while trimming CHF net short exposure. In the dollar bloc currencies, leveraged funds extended AUD net shorts significantly and CAD net shorts at the margin.”

“NZD positioning flipped to net longs from net shorts. Meanwhile, asset managers added to AUD net shorts while trimming CAD net shorts. NZD net shorts remained unchanged. In MXN, leveraged funds added to their net longs by more than one-tenth while assets managers cut their net longs at the margin.”