COT: Dollar bears putting their eggs in one basket

This summary highlights futures positions and changes made by speculators in forex, bonds and stocks up until last Tuesday, August 25. A week that saw a continued rally in U.S. stocks with the S&P 500 adding another 1.6%. The dollar rose for a second week while bonds held steady ahead of Fed chair Powell’s speech last Thursday.

Following a brief pause, speculators resumed their dollar selling during the week to August 25, a week where the Greenback actually recorded broad gains against the ten IMM currency futures and the Dollar Index tracked in this. The net dollar short rose by $2.6 billion to reach $34.8 billion and we have to go back more than nine year to find a similar level of aggressive dollar selling. 

As per the table below it is however clear, that speculators increasingly have put all their eggs in one basket and bet on further strength of the euro. The euro net-long reach a fresh record of 211,752 lots, the equivalent of €26.5 billion. The increase was primarily driven by short sellers throwing in the towel after the gross short saw a 11,992 lots reduction to a nine-year low at just 50,309 lots.

Elsewhere additional buying of the JPY and continued short covering of the CAD made up the rest of the buying while some selling of CHF and GBP reduced the overall impact.