Data in this report cover up to Tuesday Jan 31 & were released Friday Feb 3.
• Speculative investors continued the recent trend of lightening up on their aggregate long USD positions in the week through Jan 31, CFTC data released today show. Overall, investors appear in a more cautious frame of mind regarding the outlook for the USD amid concerns about the US reflation trade. Most currency contracts saw net positioning reduced in the week. In fact, the only notable increases in exposure came in the CHF and gold space, which suggests a mild preference for safe havens. The aggregate USD long position carried by the market fell USD2.2bn to just over USD20bn, suggest USD bullish sentiment is at its lowest level since mid-November.
• Net positioning in the EUR and the JPY continues to dominate overall positioning and accounts for well over half of the overall bearish bet on the currencies at the moment. Both contracts saw net reductions in exposure this week, driving mainly by gross short covering, of a little under USD1bn apiece.
• Net CAD positioning remains quite intriguing; despite the pronounced drop in the CAD—and a generalized increase in gross CAD long and short positioning—in the past few weeks, the market’s net CAD exposure is basically flat. Neutral sentiment is reflected in AUD and NZD positioning as well. Net bearish bets on the MXN are falling while investors seem happy to retain a decently bet against the GBP despite the recent volatility in the pound.