COT: Dollar sold ahead of dovish ECB surge

Ole Hansen

Head of Commodity Strategy, Saxo Bank Group
Ole Hansen joined Saxo in 2008 and has been Head of Commodity Strategy since 2010. He focuses on delivering strategies and analyses of the global commodity markets defined by fundamentals, market sentiment and technical developments.

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The speculative dollar short against nine IMM currency futures increased by 29% in the week to June 12. This before its explosive move higher last Thursday following the European Central Bank meeting.. 

The net dollar selling was broad-based with the exception of EUR and not least MXN where bearish bets doubled as uncertainty about NAFTA weighed. Despite trading weaker, traders still bought JPY which took the net-long to a seven-month high. 

In fixed income the overall short duration of bonds held by leveraged funds were reduced for a fourth week. The CFTC reporting period up until last Tuesday captured the sharp short covering rally on June 7 in US 10s while curve flattening trades continued to be in demand ahead of last week’s Federal Open Market Committee rate hike.

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