Takeaways From This Week's COT Report: CAD Now The Largest Held Net Long

Data in this report cover up to Tuesday May 31 & were released Friday June 3.

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The aggregate long USD position has climbed to its highest level since late March following its fourth consecutive week of improvement providing for a cumulative $12.7bn swing off the $6.7bn aggregate short from early May. This week’s changes were relatively limited, with a modest deterioration in sentiment toward JPY, CHF, and AUD. Bearish sentiment toward EUR and GBP was unchanged, leaving them as the largest held net shorts. CAD has taken the top spot as the largest held net long, edging out JPY.

CAD bulls drove this week’s improvement in sentiment and boosted the net long position by $0.5bn w/w to $2.0bn—allowing CAD to become the largest held net long among its peers. Further improvement will require sustained confidence from CAD bulls, given the slowdown in the pace of short covering.

Meanwhile, AUD sentiment has taken a decisive turn into bearish territory, the position shifting to net short for the first time since early February. Note that investors are paring back risk to both sides, suggesting uncertainty with regards to the near term path for AUD.

JPY sentiment has deteriorated for a sixth consecutive week, providing for a cumulative $6.6bn narrowing in the net long position from its extended $8.2bn level seen in mid-April. The loss of confidence among JPY bulls remains the primary driver, as we note a remarkable degree of stability among JPY bears.