15 January 2018 at 8:56 GMT
- Huge rise in non-commercial USD short in week ending Jan 9
- The week saw the dollar fall to its lowest since September
- The euro experienced continued strong demand
By Ole Hansen
The non-commercial dollar short against eight IMM currency futures doubled to $9.2 billion in the week to January 9. A week that ended with the dollar falling to the lowest since September against its G-10 peers. The euro continued to see strong demand with the net-long rising to a fresh record.
Another major contributor to the rising dollar short was as sharp reversal of the aggressive selling that had hit the AUD in recent weeks. The buying of 25,492 lots (AUD 2.5 billion) turned the position back to a net long.
The IMM EUR net-long reached a fresh record last Tuesday ahead of (a) European Central Bank minutes that mentioned the bank being open to revisiting its policy guidance and (b) news that Germany was heading for a grand coalition.
JPY short-sellers got wrong footed by the potential sign from the Bank of Japan that it is preparing to scale back it monetary stimulus. Ahead of JPY's sharp rally last Wednesday, funds had increased bearish JPY bets to 125,526 lots and it remains by far the most shorted of the G8 currencies.
– Edited by Clare MacCarthy
Ole Hansen is head of commodity strategy at Saxo Bank