Japanese yen net longs continued to rise

These are the main important points of CFTC Position Report for the week ending September 3rd.

• Non-commercial (speculative) net long positions in the Japanese yen rose for a fourth consecutive week, reaching levels last seen in February 2021 at around 41,000 contracts. Notably, both the net long/short ratio and the net position/open interest ratio rose to their highest levels in over a decade, surpassing 1.80 and approaching 13%, respectively. Meanwhile, commercial participants (hedge funds) continued to maintain a net short position. During the period, USD/JPY rose to a two-week high near 147.20, only to reverse and fall near 2024 lows. This move was influenced by expectations of the Fed’s interest rate cuts, coupled with some obscure remarks. from BoJ officials.
• Speculative net long euro positions rose to near year-to-date highs, slightly above the 100,000 mark. This increase was also reflected in the long/short ratio and net shorts held by commercial players. EUR/USD has seen a gradual decline, but this downward move has so far found solid support around the 1.1030 level. Meanwhile, expectations of a potential rate cut by the Fed in September continued to shape market sentiment for the pair.
• Speculators increased their net long positions for a third straight week, taking them to new five-week highs north of 108,000 contracts, along with a welcome increase in open interest. Following its risk rivals, GBP/USD edged lower, finding support in the sub-1.3100 region.
• Non-commercial net long positions in the US dollar rose further, surpassing the 19,000 mark for the first time since early December 2023. This increase occurred despite a drop in open interest. The US Dollar Index (DXY) showed a solid rebound, nearing the 102.00 level, as investors continued to consider an expected Fed rate cut later in the month. In addition, some positive economic data helped strengthen the case for a soft landing for the US economy.
• Speculators’ net long positions in WTI crude fell to two-week lows amid a significant increase in gross short positions. Meanwhile, traders continued to grapple with lingering demand concerns stemming from the Chinese economy, along with uncertainties surrounding the US economy and the prospect of a smaller interest rate cut by the Fed this month. These factors contributed to a fairly sharp decline in oil prices, eventually pushing the price per barrel below the $70.00 mark to hit new annual lows.