🧮Hedge Funds Build Dollar Net Long Position: Cable FX Macro

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• The latest week has shown a notable increase in the positioning of fast money, which refers to speculative investors who typically engage in short-term trading strategies. Specifically, they have built on their net long position in the US dollar (USD) by an impressive 5.21K contracts, bringing the total net long position to 43,219 contracts. This data is derived from our comprehensive calculations that utilize the weekly Commitments of Traders (COT) report published by the Commodity Futures Trading Commission (CFTC). This report provides valuable insights into the trading activities of various market participants, including hedge funds and other speculative traders. Furthermore, the percentage of open interest in the dollar held by hedge funds has also seen a slight uptick, now standing at 2.3%. This figure marks the highest level recorded since early April, indicating a growing confidence among hedge funds in the strength of the dollar against other currencies.

• During the same week, one of the most significant and dramatic shifts in the percentage of open interest was observed in yen futures held by leveraged funds. The percentage of open interest (OI) in Japanese yen (JPY) futures has now reached an alarming -11.7%, reflecting a pronounced bearish sentiment among traders and marking the most negative reading since February of this year. This bearish positioning suggests that leveraged funds are increasingly betting against the yen, anticipating further declines in its value. Despite this stark bearish outlook, it is important to note that the current percentage of open interest in JPY futures remains above its 5-year average. This indicates that while there is a growing pessimism about the yen in the short term, the overall interest in yen futures has not diminished to levels seen in the past, suggesting that there are still traders who believe in the potential for a recovery or stabilization of the yen in the longer term.