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Market Sentiment

US dollar net short bets decrease accelerated to $7.67 billion from $9.07 billion against the major currencies during the one week period, according to the report of the Commodity Futures Trading Commission (CFTC) covering data up to May 19 and released on Friday May 22. The change in overall dollar position was mainly due to significant increase in bearish bets on Canadian and Australian dollars as well as British Pound, and decrease in bullish bets on euro, while bullish bets on Swiss franc increased. Once again the Pound, Canadian and Australian dollars maintained net short positions against the dollar. The bearish dollar bets declined as Federal Reserve chair Powell warned not to ‘bet against American economy’ as the Fed is ‘Not out of ammunition.’ Bearish bets on dollar declined despite US Labor department report showing nearly 36.5 million Americans lost their jobs in the previous eight weeks. A Department of Commerce report US retail sales decline accelerated in April also didn’t result in increase in dollar bearish bets.

World oil prices continued to rise and oil-based instruments appeared among the leaders of growth. Currencies of commodity-dependent countries such as Australia, New Zealand, Canada, Mexico, South Africa were in high demand.

US dollar bearish bets decrease continued to $9.07 billion from $9.17 billion against the major currencies during the one week period, according to the report of the Commodity Futures Trading Commission (CFTC) covering data up to May 2 and released on Friday May 15. The marginal change in overall dollar position was mainly due to marginal decrease in bullish bets on Swiss franc, increase in bearish bets on Australian dollar and British Pound, as well as increase in euro bullish bets. Once again the Pound, Canadian and Australian dollars maintained net short positions against the dollar. The ICE US Dollar index rose as the China’s General Administration of Customs reported Chinese exports rose unexpectedly 3.5% in April from a year earlier, after falling 6.6% in March. And Dollar strengthened despite the April US jobs report indicated unemployment jumped to 14.7% due to US job losses unseen since the Great Depression of the 1930s.

World oil prices continued to rise for the 2nd week in a row. Since May 1, OPEC + countries have limited production by 10 million barrels per day. Some US shale companies joined them. A number of countries reported mitigation of quarantine requirements in the wake of the coronavirus pandemic from May 11-12. All this contributed to an increase in oil demand. Accordingly, oil and trading instruments based on it have emerged as top gainers and losers. Amid the risks of another worsening of the US-China trade war, the yen and the Swiss franc strengthened.

US dollar net short bets decreased to $9.17 billion from $10.23 billion against the major currencies during the one week period, according to the report of the Commodity Futures Trading Commission (CFTC) covering data up to May 5 and released on Friday May 8. The change in overall dollar position was mainly due to decrease in bullish bets on Japanese yen and decrease in bearish bets on Canadian and Australian dollars as well as decrease in bullish bets on euro as net short positions of Pound, Canadian and Australian dollars were maintained against the dollar. The dollar net short bets declined as the Federal Reserve kept federal funds rates in 0%-0.25% range while Fed chair Powell said the central bank would broaden a key support program for credit markets. Dollar bearish bets declined despite bigger than expected GDP decline - at 4.8% annual rate in the first three months of 2020, the biggest drop since 2008. The decline in euro bullish bets was not surprising taking into account the announcement by the European Central Bank on further easing of conditions for its existing targeted long-term refinancing operations and introduced a new program of non-targeted pandemic emergency longer-term refinancing. This was expected given a sharp drop in euro-zone first-quarter GDP – it fell an annualized 14.4%.

The world oil prices continued to increase for the 2nd week in a row. Since May 1, OPEC + countries have limited production by 10 million barrels per day. Some US shale companies joined them. A number of countries have reported a mitigation of quarantine requirements in the wake of the coronavirus pandemic from May 11-12. All this contributed to an increase in oil demand. Accordingly, oil and trading instruments based on it became the top gainers and losers. Amidst the risks of another escalation of the USA-China trade war, the yen and the Swiss franc strengthened as heaven currencies.

US dollar bearish bets decreased to $10.23 billion from $11.51 billion against the major currencies during the one week period, according to the report of the Commodity Futures Trading Commission (CFTC) covering data up to April 28 and released on Friday May 1. The change in overall dollar position was mainly due to increase in bearish bets on Canadian and Australian dollars as well as decrease in bullish bets on euro as net short positions of Pound, Canadian and Australian dollars were maintained against the dollar. The US Congress passed another coronavirus relief package worth nearly $500 billion to replenish funds for small businesses while US Labor department reported 25 million Americans have lost their jobs over the prior five weeks.

Oil quotes stabilized in the world market. Starting May 1, OPEC countries will limit oil production by 10 million barrels per day. Almost immediately after that, the United States and Canada are going to consider joining this restriction. A number of countries have eased quarantine requirements. All this contributed to a slight increase in oil demand. Accordingly, the currencies of commodity countries, such as the Russian ruble, the Australian and New Zealand dollars, the South African rand, strengthened, as well as the stocks of oil companies.

US dollar net short bets increase continued to $11.51 billion from $11.34 billion against the major currencies during the one week period, according to the report of the Commodity Futures Trading Commission (CFTC) covering data up to April 21 and released on Friday April 24. The change in overall dollar position was due to increase in bullish bets on yen and Swiss franc, while bearish bets on Canadian and Australian dollars were cut further as they maintained net short positions against the dollar. British Pound bets turned bearish joining Canadian and Australian dollars. Bearish dollar bets rose as the Commerce Department reported a bigger than expected 8.7% drop in retail sales in March, and the Federal Reserve reported US capacities utilization declined to lower than expected 72.7% in March from 77%, while the industrial production fell 5.4% - the largest drop since 1946.

Market participants decided that the decrease in oil production of OPEC + countries by 10 million barrels per day from May 1 is not sufficient to stabilize the global oil market. The decline in world demand is estimated to be much higher - at 25 million barrels per day. Because of this, oil was among the top losers, and composite trading instruments based on it were the growth leaders. Accordingly, in the Forex market, the currencies of commodity-exporting countries became top losers, weakening against the US dollar.

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