The latest CFTC Positioning Report, covering the week ending September 3, reveals significant shifts in market sentiment. Speculative net long positions in the Japanese yen saw an increase for the fourth consecutive week, reaching levels not seen since February 2021 with approximately 41,000 contracts. Both the long/short ratio and the net position relative to open interest surged to over a decade-high, surpassing 1.80 and nearing 13%. During this period, the USD/JPY reached a two-week high near 147.20 but later reversed, dipping to its lowest levels for 2024. This movement is attributed to expectations of interest rate cuts by the Federal Reserve, coupled with somewhat hawkish comments from officials of the Bank of Japan.
In the eurozone, speculative net long positions increased, nearing year-to-date highs just above 100,000 contracts. This trend was mirrored in the long/short ratio, as well as the growing net short positions held by commercial players. Although the EUR/USD pair experienced a gradual decline, it found substantial support at the 1.1030 level. Market sentiment for this currency pair was primarily influenced by ongoing expectations of a possible rate cut by the Fed this month.
The British pound also saw speculation boosts, with net long positions climbing for the third consecutive week, reaching five-week highs above 108,000 contracts alongside a notable rise in open interest. Despite this, GBP/USD edged lower, finding support below the 1.3100 threshold.
Meanwhile, non-commercial net long positions for the US Dollar surpassed 19,000 contracts for the first time since early December 2023, despite a fall in open interest. The US Dollar Index showed recovery, nearing the 102.00 level, supported by anticipated Fed rate cuts and encouraging economic data that suggested a potential soft landing for the US economy.
In the commodities market, net long positions in WTI crude oil dropped to two-week lows, amidst a rise in gross short positions. Traders are increasingly concerned about demand from China and ongoing uncertainties surrounding the US economy and anticipated Fed rate cuts, resulting in a sharp decline in oil prices that brought the per-barrel price below $70, marking new yearly lows.
