Dollar bearish bets decline continued despite big US GDP decline

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%.