As suggested in the CFTC Commitments of Traders report in the week ended August 21, NET LENGTH of USD index rose +2 089 contracts for 34 122 contracts for the week. However, this was driven by the decline in speculative short positions offsetting that of longs. during the reporting week, the DXY index plunged -1.52%. For the week ahead, traders might trim their bets on the greenback after Fed Chair Jerome Powell sent dovish message at the Jackson Hole symposium. 
NET SHORT of EUR futures rose +3 052 contracts to 4 841 contracts. Although EURUSD recovered, up +1.29%, for the week, traders remained pessimistic over the outlook of the Eurozone. Despite ECB’s tapering plan, the market still expects the policy rate to stay at historically low level for some time. The yield spread between US and Eurozone Treasury yields continue to weigh on the prospect of the single currency. Meanwhile, NET SHORT for GBP futures deepened to 72 338 contracts, up +11 597 from the prior week. GBPUSD rebounded +1.41% during the reporting period. However, the outlook for sterling remains clouded by Brexit uncertainty.
On safe-haven currencies. Net SHORT for CHF futures rose +1 369 contracts to 47 218 while that for JPY futures plunged -10 962 contracts to 47 406 during the week. Safe haven demand have lifted the yen recently. Traders added speculative long positions by +4 747 contracts, and reduced short by -6 215 contracts, last week. Yet, Japanese economic outlook remains the key. Released last week, core CPI, excluding fresh food only, rose 0.8% y/y in July, maintaining the same pace as in June. This remained far below the central bank’s +2% target. inflation excluding both fresh food and energy prices, one that is more compatible with core inflation in international standard, edged slightly higher to +0.3% y/y, up from +0.2% in June.
All commodity currencies stayed in NET SHORT positions. NET SHORT for AUD futures dropped -1 576 contracts to 50 207, while that for NZD futures fell -1 550 contracts to 25 143. NET SHORT for CAD futures added 823 contracts to 27 021.
