IMM Positioning

Speculative investors add to USD shorts

The latest IMM data covers the week from 12 to 19 May.

The IMM report shows modest movements in speculative positions, though the recent movement out of USD has continued. The dollar has weakened on a broad base in recent weeks and even though the accelerated dollar decline, which helped EUR/USD break above the strong 1.3739 resistance, happened after the IMM data was collected, the IMM report does show a further build-up in short USD positions.

Increased bets that the dollar decline has further to run have mainly been taken against EUR, JPY and CHF, which all saw a further build-up in long positions. Net long positions in all three currencies are now around 10% of open interest, which is the highest since July last year for both EUR and CHF.

While long positions against the USD have been extended in most currencies, speculative investors have increased net short positions in GBP. Though still far from April’s extreme levels, short position positions were extended by USD0.4bn. However, shorting GBP against USD has been a costly strategy in recent weeks and the fact that significant short positions remain in place does raise the risk of a catalysed move higher in GBP/USD.

Overall, the IMM data thus show that the market has become even more USD bearish and that this strategy is preferred to be played against the safe-haven currencies and the euro. While the trend is clearly for a weaker dollar at present, the build-up in short USD positions does raise the risk for a strong correction should the sentiment turn round.

Speculative investors are currently net long against the USD in all currencies covered in the IMM data – with the exception of GBP where significant short positions remain in place.

The IMM data

The IMM data is part of the Commitments of Traders (COT) reports published by the U.S. Commodity Futures Trading Commission (CFTC). The IMM data provides a breakdown of each Tuesday's open futures positions on the International Money Market (IMM) a division of the Chicago Mercantile Exchange. All of a trader's reported futures positions in a commodity are classified as commercial if the trader uses futures contracts in that particular commodity for hedging as defined in CFTC Regulation 1.3(z), 17 CFR 1.3(z). A trader may be classified as a commercial trader in some commodities and as a noncommercial trader in other commodities

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