US dollar bullish bets resume growth

US dollar bullish bets rose to $24.17 billion from $22.45 billion against the major currencies during the previous week, according to the report of the Commodity Futures Trading Commission (CFTC) covering data up to December 27. The economic data during the week were mixed. The US economic growth was revised upward to 3.5% from 3.3% in third quarter according to the GDP final reading. The consumer confidence jumped to 113.7 from upwardly revised 109.4 in November, hitting its highest level since 2001.

The S&P Case-Shiller index of home prices climbed 0.6% in October and was up 5.1% over year, unchanged from the prior month. New home sales jumped 5.2% in November after 1.2% decline in previous month while existing home sales rose just 0.7% compare with 15% growth in October. At the same time initial jobless claims rose to 275000 from 254000 in the prior week, the personal consumption expenditure index recorded no change on month after rising 0.3% in October and personal income was stagnant while personal spending rose 0.2% on month compared with 0.4% upwardly revised increase in October. Also the rise in durable goods orders excluding transportation declined to 0.5% on month compared with 0.9% in October, pointing to slowing of growth in the final quarter due to falling business investment. The decline of the Chicago Fed National Activity Index to -0.27 November from -0.05 in the prior month also signals slowing of growth in the fourth quarter. Investors increased the dollar bullish bets after the FOMC decision for the first time in more than a month. As is evident from the Sentiment table, sentiment improved for the euro, Canadian dollar and British Pound. And all the major currencies are now held net short against the US dollar.

The euro sentiment continued to improve with the net short euro position narrowing by $1.06bn to $9.07bn. Investors increased the gross longs as they covered shorts by 5821 and 2816 contracts respectively. The British Pound sentiment also continued to improve as Pound net shorts fell by $209 million to $4.38 billion. The net short position in British Pound narrowed as investors increased both the gross longs and shorts by 5910 and 3659 contracts respectively. The Japanese yen sentiment deteriorated at roughly prior week’s pace as the net short position widened $1.26bn to $9.26bn. Investors cut both the gross longs and shorts by 23635 and 12075 contracts respectively.

The Canadian dollar sentiment improved considerably with the net shorts declining by $762 million to $118 million. Investors built both the gross longs and shorts. The sentiment for the Australian dollar turned bearish with the $0.29bn net long position turning into a net short of $108 million. Investors built both the gross longs and shorts. The sentiment toward the Swiss franc also turned bearish with the $0.86bn net long position turning into $1.23bn net short as investors reduced both the gross longs and shorts.

CFTC Sentiment vs Exchange Rate