Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
Head of Commodity Strategy
Summary: Speculators continued to sell dollars against ten IMM currency futures during the week to August 27. This ahead of Fridays dollar rally when the euro dropped to a 27-month low below €1.10.
Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.
Ahead of Friday’s dollar rally when the euro dropped below €1.10, speculators had continued to sell the Greenback. In the week to August 27 the gross dollar long against ten IMM currency futures was reduced to a 14-months low at $10.6 billion with buying of JPY, GBP and not least CHF being the main contributors.
The 33,600 lots long in JPY was the most bullish since November 2016 while net-short bets on the Swiss franc fell to 3,800 lots, the lowest since October 2017. The net-short in Sterling was reduced for a third week before PM Johnson’s decision to suspend Parliament for five weeks helped send the price lower again.