US Dollar Net Longs Fall


US dollar net long position slipped from $32.8 billion to $31.8 billion against the major currencies in the previous week, according to the report of the Commodity Futures Trading Commission (CFTC) covering data up to December 29. Economic data during the week indicated personal income and spending rose in November. The personal income rose 0.3% in November after 0.4% gain in October, and personal spending posted a 0.3% monthly gain. A 4.3% increase in sales of new homes in November after 10.7% growth in October indicated housing market also improved. The 0.1% increase to 5.5% year-on-year in October from a 5.4% rise in September in Case-Shiller house price index for 20 metropolitan areas in US also showed housing market continued to strengthen. At the same time durable goods orders were flat in November and manufacturing activity contracted as indicated by a sharp decline in Dallas manufacturing index for December as a result of weak export demand due to stronger dollar and lower capital spending in energy sector. The data highlighted the strength of consumer demand confirmed also by improved consumer confidence. As is evident from the Sentiment table, the sentiment improved for all currencies except for Canadian dollar and British Pound, and the Swiss franc is still the only major currency held net long against the US dollar.

The bearish euro sentiment improved slightly with net short bets in euro narrowing by $0.12bn to $21.9bn. Euro’s share edged up to about 69% of long US dollar position. The euro net short position fell as investors covered short contracts by 4033 and reduced the long bets by 3536 contracts. The Japanese yen sentiment also improved considerably, with net short position in yen falling by $1.3bn to $1.78bn. Investors increased the gross longs by 7331 and cut gross shorts by 5780 contracts. The sentiment continued to deteriorate for the British Pound with the net short position widening by $0.4bn to $2.8bn. Investors cut the gross longs and increased the gross shorts.

The Canadian dollar bearish sentiment intensified with the net short position widening by $0.3bn to $4.3bn. The Canadian dollar is still the second largest held net short after euro. Investors increased both gross shorts and gross longs. The bearish sentiment toward the Australian dollar moderated with net short bets narrowing by $0.2bn to $1.2bn. Investors covered shorts and cut gross longs. The sentiment towards the Swiss franc continued to improve at previous week’s pace with the net long position increasing by $101 million to $349 million. Investors cut both the gross shorts and gross longs.