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Institutional FX Positioning: USD Long Unwinding vs. Extreme CAD Bearishness and JPY Short Squeeze
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As dealers unwind dollar-centric trades, institutional placement in major currencies is being fundamentally realigned.
The net-long exposure on the US Dollar fell by $12.5 billion down to $35.9 billion, making it the second-fastest weekly drop in six years.
The Japanese Yen saw the sharpest reversal as a big short squeeze set off the fastest rate of short-covering among portfolio managers in ten years.
Inspired by currency interventions from Japan's Ministry of Finance and Bank of Japan policy updates, speculators cut over 100,000 gross short contracts in a single week.
Conversely, sentiment around the New Zealand Dollar and the Australian Dollar is turning somewhat more favorable; big speculators added new long positions to AUD on Reserve Bank of Australia hawkishness and cut New Zealand Dollar net-short exposure in half by ongoing short-covering.