Commodity currencies remain on the nose with traders

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In early 2017 currency traders were hoovering commodity-linked currencies such as the Australian, Canadian and New Zealand dollars, lifting their bullish bets on further price gains to the highest level since early 2013.

However, in the space of less than two months, and mirroring weakness in commodity prices, the flows into commodity currencies have slowed, and largely reversed.

This chart, showing net long non-commercial positions in the Australian, Canadian and New Zealand dollars based off data from the US Commodity Futures Trading Commission (CFTC), demonstrates the sharp reversal in sentiment towards the commodity-currency bloc perfectly.

The chart comes from ANZ.

Source: ANZ

Net long positioning — simply the sum of long options and futures positions less short positions in those currencies — were unwound further last week, with the move broad-based in nature.

“All three currencies saw net selling,” said Irene Cheung and Rini Sen, strategists at ANZ.

“The AUD reversed its buying from the past two weeks with net selling of $US400 million.

“CAD and NZD continued to see net selling for the fifth straight week at $US200 million each.”

Net short speculative positioning in the Kiwi and Canadian dollar — at $US3.2 billion and $US200 million respectively — now stands at the most elevated levels since early last year.

However, even with the decline in long positions reported last week, the Aussie remains the odd one out with net positioning still long $US3.5 billion.

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