Japanese net longs continued to rise

These are the main conclusions of CFTC Position Report for the week ending September 17.

• Speculators increased their net long Japanese yen prices for a sixth consecutive week, along with a rise in the long/short ratio. Meanwhile, commercial players kept their shorts well in play despite significantly reducing their gross positions. Of note, however, is that open interest fell sharply by about 47%. USD/JPY maintained its bearish leg unchanged and dropped to 2024 lows near 139.60, only to regain some balance ahead of the September 18 Fed meeting.
• Speculative net euro longs retreated to four-week lows, along with a similar move in commercial net shorts. Open interest, meanwhile, fell nearly 9%. During the period, EUR/USD accumulated further upward traction and retook the 1.1100 barrier and above as investors digested the ECB rate cut on 12 September.
• US dollar net non-trading longs retreated to levels last seen in mid-March as speculators more than halved their gross holdings. Furthermore, this move coincided with a marked decline in open interest. The US Dollar Index (DXY) has embarked on a weekly pullback that will eventually see it dip into the 100.20 region for the first time since July 2023 following the Fed’s jumbo rate cut on September 18.
• Speculators cut their net short sterling to five-week lows amid a sharp decline in gross longs. Open interest followed suit and fell nearly 22%. That said, GBP/USD held firm and extended its lead ahead of the BoE meeting, clearing the 1.3200 hurdle.
• Speculative net longs in gold rose to new highs beyond 310,000 contracts amid a 5% rise in open interest. Gold prices have maintained their uptrend well amid firmer speculation about Fed easing in the latter part of the year. and helped by the weak dollar and the resurgence of geopolitical tensions in the Middle East.