The latest CFTC Positioning Report for the week ending August 20 highlights notable trends in the foreign exchange markets. Speculators have sustained their net-long positions in the Japanese yen for the second week in a row, coinciding with a minor rise in open interest. During this timeframe, the USD/JPY pair experienced a swift decline from its ascendance into the mid-149.00 range, redirecting focus back to a downward trend.
In contrast, net long positions in the US Dollar decreased, reaching levels not seen in two weeks amid growing open interest. The US Dollar Index has commenced a significant pullback toward annual lows, as market participants began to factor in the potential for additional and more substantial interest rate reductions by the Federal Reserve.
Speculative bullishness in the EURO is evident, with net long positions increasing to levels reminiscent of early June. However, commercial traders, such as hedge funds, are still net short, with their contracts climbing to multi-week highs. As a result, EUR/USD has seen a pronounced rebound, breaking past the psychological barrier of 1.1000 and achieving new highs for the year, a trend largely supported by the dollar’s recent drop.
The British pound also exhibited renewed strength, with net long positions climbing to three-week highs alongside a robust upward trend in GBP/USD , which surpassed the significant 1.3000 level, reaching its highest level in 13 months. Conversely, non-commercial traders have trimmed their net longs in the Australian Dollar to levels not seen in three weeks, influenced by the hawkish outlook from the Reserve Bank of Australia and ongoing dollar retracements. The AUD/USD pair touched near two-month highs, nearing the 0.6800 level.
In the commodities market, gold prices demonstrated an unyielding upward trajectory, eclipsing the $2,500 level per ounce, amid soaring net long positions. This surge can be attributed to increasing expectations for interest rate cuts by the Fed, coupled with persistent geopolitical tensions in regions such as the Middle East and Ukraine.
