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US Dollar Shorts Slashed, GBP/USD & EUR/USD Shorts Pick-Up - COT Report

US Dollar Shorts Slashed, GBP/USD & EUR/USD Shorts Pick-Up - COT Report

Justin McQueen, Strategist

US Dollar, EUR/USD, GBP/USD, COT Report –Analysis

  • US Dollar Shorts Slashed
  • GBP/USD & EUR/USD Shorts Pick-Up
  • Investors Defensive on Risk Sensitive Currencies Amid US-China Tensions

The Predictive Power of the COT Report

How to Read the CFTC Report

Source: CFTC, DailyFX (Covers up to May 19th, released May 22nd)

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US Dollar Shorts Slashed, GBP/USD & EUR/USD Shorts Pick-Up - COT Report

In the latest reporting week, investors had continued to pare back their bearish bets in the US Dollar, which saw a $1.4bln reduction against G10 currencies. Most notably the bulk of the positioning changes had been observed in the Euro, which saw net longs yet again cut back as outright shorts continued to pick-up. However, while Euro longs remain sizeable, price action has shown little signs of a directional bias as ranges persist.

As political risks and BoE NIRP (negative interest rate policy) chatter do the rounds, speculators continue to boost their bearish bets in the Pound with overall net shorts at $1.454bln. In light of these risks, GBP/USD rallies may be somewhat short-lived with the pair vulnerable to pullbacks.

Rising tensions between the US and China have seen investors grow increasingly defensive against risk-sensitive currencies such as CAD and AUD with net shorts rising $224mln and $294mln respectively. While safe-haven currencies remain in favour, funds added to Swiss Franc net longs to total $1.1bln, making positioning somewhat stretched.

US Dollar

EUR/USD

GBP/USD

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USD/JPY

USD/CHF

USD/CAD

AUD/USD

NZD/USD

For a more in-depth analysis on FX, check out the FX Forecast

--- Written by Justin McQueen, Market Analyst

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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