Speculative traders bought dollar against all eight IMM currency futures apart from EUR during the week ending January 29. This resulted in the gross-short dollar position being reduced by 22 percent with particularly the CAD and AUD being sold. The buying of EUR continued with the net-long reaching the highest level since July 2011.
The selling of JPY resumed following the move above 90 USDJPY. Prior to this we had witnessed six weeks of net JPY buying despite its continued slump during this time. It indicates that speculative investors using IMM currency futures to gain exposure failed to chase it and as such could not have not been the main driver of the move higher.
Looking at the data from last week they could however now become the driver should the move higher in USDJPY continue. While JPY has continued to slump we have seen the gross long position rise as some traders are beginning to look for a peak, which they so far have failed to find, leaving their long positions out of pocket. Continued JPY weakness could eventually trigger some stop loss selling on these positions which will help weaken the JPY even further.
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