USD longs extended; GBP shorts at an all-time high – Deutsche Bank

Research Team at Deutsche Bank, notes that there was a significant build-up in the overall long dollar exposure in the run-up to the FOMC meeting last week.

Key Quotes

“Implied USD longs as a fraction of open interest increased to 16% from 12.2% in the previous week. The value of the dollar’s net long position increased to the highest level since mid-February against all the major currencies with the exception of CAD.

The trend increase in EUR and GBP shorts continued as investor’s added large amount of gross shorts, taking GBP’s net short position to an all-time high ahead of this week’s BoE meeting. The EUR net short position is also at the highest level since Feb-2016.

Speculators reduced their bullish bets in safe haven currencies by unwinding JPY gross longs and adding significant gross shorts in CHF. In the dollar bloc, investors were less bullish in the Antipodes, while extending their net long position in CAD (albeit marginally). Elsewhere, bearish sentiment in MXN extended as decent amount of gross shorts was added.

Traders in Financial Futures data show that leveraged funds have increased their implied dollar longs considerably, whereas asset managers have pared theirs marginally. Leveraged fund extended their bearish view on EUR, GBP, JPY and CHF by adding decent amount of net shorts for another week.

By contrast, asset managers were more bullish on the same currencies, by adding net longs in EUR and paring net shorts in GBP, JPY and CHF. In terms of commodity currencies, leveraged funds added a decent amount of net longs in AUD and CAD, while trimming NZD net longs marginally. By contrast, asset managers reduced their bullish exposure in AUD and CAD, while increasing their bearish sentiment in NZD. In MXN, leveraged funds extended their net shorts marginally, while asset managers trimmed their net longs.”