Head of Commodity Strategy
Click here to download Saxo Bank's Commitment of Traders (IMM currency futures) update for the week ending April 24. Click here to download our Commitment of Traders (equity indices and bonds) update for the same week.
The speculative IMM dollar short was cut by $4 billion in the week to April 24. This, the first major reduction in 10 weeks, occurred after the dollar began challenging resistance, especially against EURUSD and the DXY.
Overall it was a week of weakening conviction with existing positions being reduced across all of the nine IMM currency futures tracked in this report. The dollar strength resulted in long liquidation in EUR, GBP, JPY, NZD, MXN, and RUB while short-covering was seen in CHF, CAD, and AUD.
The 20,882 lot reduction of what was a record EUR net-long to 130,594 lots was the biggest one-week reduction in four months. Overall traders have maintained a position of between 125,000 and 150,000 lots since January.
As the yield on US 10-year bonds began challenging 3%, leveraged funds extended a record short in US 10-year notes for a second week. The value of one basis point move (DV01) rose by $3.7 million to $45 million. Broad-based selling across the curve led to an overall increase of the DV01 by $15 million.
AI: The good, the bad, and the bubble
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Steen Jakobsen,
Chief Investment Officer
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
Peter Garnry,
Head of Equity Strategy
As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Ole S. Hansen,
Head of Commodity Strategy
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist
