USD REMAINS FAVORED WITH MINOR SHIFTS IN SENTIMENT
Data in this report cover up to Tuesday Mar 3 & were released Friday Mar 6.
• Every currency continues to be held net short against the USD
but changes this week were immaterial for most currencies. The
net long USD position is at $42bn (see chart), having narrowed by
small amounts for each of the last five weeks. This week’s data
provides few clues as to how sustainable the late week USD rally
will prove; however we expect that the breaking of spot ranges is
an important bullish shift.
• Traders are bearish the commodity currencies, holding both AUD
and CAD net short (-$3bn and -$5bn, respectively), but with minimal
changes this week.
• EUR remains the largest held net short at $24.1bn with a four
week, $4.1bn run of improving sentiment largely driven by a decline
in gross shorts (middle right, p2). The net short $2.6bn position
in GBP is relatively modest, however this week’s $0.5bn widening
is notable in that it marks a reversal of the improvement
that had been observed over the past five weeks.
• Investors have added risk to CHF and JPY in a manner that has
provided for a minor deterioration in sentiment toward both. The
build in gross shorts for CHF and JPY follows several consecutive
weeks of covering and may provide early clues to a bearish turn.