Speculators Still Skeptical of the Dollar into the End of February

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In the CFTC reporting period ending on February 28, speculators mostly added to gross long foreign currency futures and reduced gross short exposure.  The skepticism about the dollar came amid a dramatic shift in expectations of the timing and not so much the pace of Fed tightening.

Of the six currency futures we track, speculators added to gross long positions.  The exception were the Japanese yen (speculators liquidated less than one thousand contracts) and the Swiss franc (speculators halved the gross long position to 3.6k contracts).

The bulls added 12.6k contracts to the gross long euro position, and lifted it to 143.6k contracts.  Also of note speculators continued to accumulate a larger gross and net long position in the dollar-bloc currencies.

Speculators mostly reduced short foreign currency futures positions.  There were three exceptions. The bears added 5.5k contracts to lift the short euro position to 194.1k contracts. They also added 9.4k contracts to their gross short sterling position. It now stands at 114.0k contracts.  Speculators grew their gross short New Zealand dollar position by 2.2k contracts to 34.3k.   The largest short covering was in the Australian dollar.  The bears covered 11.5k gross short contracts, leaving  them with 43.8k contracts.

US note bears took advantage of the recent bounce to sell, while the bulls used it as an opportunity to liquidate.  Speculators gross short position in the 10-year Treasury note futures rose 51.2k contracts to 881.8k.  The bulls sold 56.1k contracts, reducing the gross long position to 472.2k. These adjustments saw the net short position increase 107.4k contracts to 409.7k.

In the oil futures, speculators took profits on a record large gross long position, while top-pickers edged back into the market.  The bulls sold 22.4k contracts and reduced the gross long position to 690.3k.  The bears increased the gross short position by 8.9k contracts.  It now stands at 165k contracts.  These adjustments resulted in a 31.4k fall in the net long position to 525.3k contracts.

28-Feb        Commitment of Traders
Net  Prior  Gross Long Change Gross Short  Change
Euro -51.2 -58.3 143.6 12.6 194.1 5.5
Yen -50.0 -50.2 29.0 -0.9 79.0 -1.1
Sterling -70.7 -66.4 43.3 5.1 114.0 9.4
Swiss Franc -11.8 -8.9 3.6 -3.4 15.4 -0.5
C$ 30.2 24.6 63.1 4.3 33.0 -1.2
A$ 51.9 33.5 95.9 6.9 43.8 -11.5
NZ$ 2.9 3.2 37.2 1.9 34.3 2.2
Mexican Peso -45.8 -56.5 39.1 3.9 84.8 -6.8
(CFTC, Bloomberg) Speculative positions in 000’s of contracts