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Traders Trimmed USD Positions ahead of FOMC and Job Data Last Week

As suggested in the CFTC Commitments of Traders report in the week ended July 31, traders trimmed bets on USD index (DXY) futures. Speculative long positions slid -372 contracts while shorts declined -3 557 contracts, resulting in an increase in NET LENGTH to 28 456 contracts for the week. The reporting week was ahead of the August FOMC meeting, which turned out to contain little surprise, and the release of the July employment report, which showed fewer than expected payroll increase but a drop in the unemployment rate from the prior month. Both events should have reinforced the Fed’s path to raise the policy rate by two more times in 2H18.

For European currencies, NET LENGTH for EUR futures dropped -6 815 contracts to 22 825 for the week. Bulls reduced their bets, by -4 966 contracts, to 174 549, while bears increased bets, by +1 849 contracts, to 151 724, for the week. GBP futures deepened into NET SHORT position, adding +643 contracts to 47 386. The increase in speculative long positions was overshadowed by even higher increase in shorts. The rate hike in August had been priced in. However, the market remained concerned over the Brent outlook. Outlook for British pound remains bearish despite the unanimous rate hike decision last week.

On safe-haven currencies. Net SHORT for CHF futures dropped -1 386 contracts to 44 422, while that for JPY futures declined -5 312 contracts to 68 457 during the week.

All commodity currencies stayed in NET SHORT positions. NET SHORT for AUD futures rose +5 990 contracts to 51 476, while that for NZD futures slipped -690 contracts to 23 680. NET SHORT for CAD futures declined -12 942 contracts to 31 569.

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