USD Net Longs Decline Further

The Commodity Futures Trading Commission (CFTC) report covering data up to May 19 showed that investors reduced US dollar net long position to $25.80 billion from $29.11 billion. As is evident from the Sentiment table, the sentiment improved for all major currencies except for the Swiss franc, and the reduction in euro’s net short bets contributed the most to the decline of US net long position. The bullish US dollar sentiment moderated further after disappointing sales data on May 13 showed April retail sales were flat. Investors had hoped economic growth would start rebounding after slowing in the first quarter, and disappointing sales report undermined expectations of accelerated growth in the second quarter. Another notable change is that the Canadian dollar became the third major currency held net long against US dollar together with the Swiss franc and Australian dollar.

The net short bets on euro narrowed $1.7bn to $23.5bn, with euro comprising the bulk of long US dollar position. The narrowing of euro net short position resulted mainly from short covering while investors cut also gross long positions for the fourth week in a row.

The Japanese yen net short position narrowed $0.2bn to $2.3bn as investors increased both gross shorts and gross long positions. The British pound net short bets narrowed $0.7bn to $2.3bn as investors increased gross longs and reduced gross short positions, reflecting improved sentiment after conservatives won the elections.

The sentiment towards Australian dollar and Canadian dollar continued to improve as their net short positions narrowed by $0.2bn and $0.7bn. Both currencies are held net long with Australian dollar net longs amounting to $0.58bn while the Canadian dollar net longs climbed to $0.3bn. While investors increased gross shorts and gross long bets in Australian dollar, the change in net short bets in Canadian dollars came from reducing both gross long and gross short positions.