US Dollar, USD/CAD, EUR/USD, COT Report –Analysis

• US Dollar Shorts Grow for 5th Consecutive Week
• Canadian Dollar Positioning Looking Stretched
• Swiss Franc Net Shorts Rise, Despite Strong Spot Performance

Canadian Dollar Positioning Looking Stretched, EUR/USD Bulls Rising - COT Report

In the latest reporting week, US Dollar shorts rose for a 5th consecutive week, although with much less conviction as net shorts had increased by a marginal $70mln. Meanwhile, net longs in the Euro grew by $909mln as optimism rises over the economic recovery in the Euro Area, which has taken EUR/USD back above 1.22. That said, with this view in mind, I remain bullish on EUR/CHF.

Bullish positioning on the Canadian Dollar continued to grow with another $620mln added (or 3% OI), making the Loonie the largest bull bet on an open interest adjusted basis across the G10 majors. However, as I have said previously, spot CAD failing to break 1.20 raises the risk for a correction with positioning beginning to look stretched (3yr Z-score of 1.89).

Across the safe-havens, both the Japanese Yen and Swiss Franc were out of favour with the latter seeing fast money accounts (leveraged funds) flip back to net short. The change In positioning is somewhat at odds with the Swiss Franc’s spot performance, which had been one of the better performers. However, given the backdrop of low volatility and improving economic fundamentals, reach moves in CHF is unlikely to be sustained.

USD/CADBullishData provided by IG

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Weekly FX Positioning

Source: CFTC, DailyFX (Covers up to May 18th, released May 21st)

US Dollar Positioning

Source: Refinitiv, DailyFX

USD/CAD Positioning

USD/CHF Positioning

Source: Refinitiv, DailyFX