• Traders are bullish the USD but this week the data highlights several interesting shifts that provide a warning of changing sentiment.
• Sentiment towards the commodity currencies of AUD, CAD and NZD remains bullish; however there has been an interesting turn towards a more neutral stance (see top left chart on page 2 or below). In the case of CAD, the gross long position has been cut by 30% over the last month, warning of a shift away from bullish sentiment.
• Bearish EUR sentiment showed an early sign of stabilization as the gross short position did not increase week-over-week and the net long position narrowed slightly to -$22bn. The data confirms that there is a hesitancy to build on existing shorts. Watching how this evolves over the next several weeks will be important for judging EUR’s direction.
• MXN sentiment shifted to neutral. This is an important shift as MXN led the build in longs that moved from MXN, to AUD, to CAD; accordingly the rapid closing of MXN longs is an important signal.
Read the full report: FX Research