Head of Commodity Strategy, Saxo Bank Group
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Despite some emerging signs of consolidation speculators nevertheless increased their bullish dollar bets against nine IMM currency futures by a net 8,000 lots, or $0.3bn, to $24.5bn in the week to August 21. This was the week where the dollar retraced some of its recent gains after President Trump went on the attack against Federal Reserve chair Jerome Powell for raising rates and thereby supporting the stronger dollar.
In fixed income, leveraged funds made a small reduction in their short duration. Largely due to a reduction of short positions in three-month Eurodollar futures and T-bonds. At the belly part of the curve, the record short in 10-year notes extended further to 700,000 lots despite the continued drop in yields and flattening yield curve.
In equities, traders increased their e-mini S&P short position by 38% while also trimming the VIX short by 23% to 102,000 lots.