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USD Alert: CFTC Data Points to Positive US Dollar Forecast

August 1, 2016 - Written by Frank Davies

Speculators Increased their US Dollar (USD) Bets on Improved Sentiment

The latest data published by the Commodity Futures Trading Commission (CFTC) on Friday revealed that speculators increased their bets on the US Dollar (currency : USD) significantly during the week leading up to Tuesday 26th July. The improvement in sentiment towards the Buck from institutional investors saw the net level of long positions on the Greenback jump from $10.42 bn the previous week to $13.66 bn.

However, analysts were quick to point out that the period covered by the latest numbers ended at midnight on the day before the US Federal Reserve made its latest monetary policy announcement, which we now know yielded no change in American interest rates and no suggestion that a hike was imminent. This factor, and the slight softening of the Dollar following Wednesday evening’s announcements had led many FX insiders to suggest that sentiment towards the Buck has now near-term topped out.

Pound Sterling (GBP) Exchange Rate Forecast to Remain Negative as 2016 Continues

Elsewhere in the CFTC numbers, there was more firm evidence that the Pound Sterling remains in the doldrums and is likely to do so for months to come following last month’s unexpected Brexit vote by the UK population. The net number of short positions on the UK unit increased once again, this time from -74,386 to -80,572. The general feeling amongst investors is that the Pound’s precarious position may be about to further disimprove, with the Bank of England (BoE) making its latest monetary policy announcement on Thursday.

Currency News: Japanese Yen (JPY), Swiss Franc (CHF) Exchange Rate Support Slipping

Meanwhile, the figures also delivered evidence that support for the safe-haven Japanese Yen (currency : JPY) and the Swiss Franc (currency : CHF) has waned in the previous seven days. With the shock of Britain’s vote to leave the European Union subsiding and share markets across the world breaking to fresh record highs, the demand for the low yielders dipped, with the net number of positive bets on the Yen dropping from 39,353 to 34,958 and those on the Franc slipping from 4,687 to a relatively lowly 946. The outlook for the Franc and the Yen now appears less go-ahead than it was in the days following the UK referendum result.
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