Institutional investors are very pessimistic about where the US dollar is heading

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Institutional investors continue to dump the US dollar.

According to ANZ Bank, citing the latest Commitment of Traders (CoT) report released by the US Commodity Futures Trading Commission (CFTC) on Friday, asset managers increased their overall net short US dollar positions by a further $US2.3 billion last week, taking total short positioning to $US22.7 billion, the highest level on record.

Source: ANZ Bank

The CFTC defines asset managers as “institutional investors, including pension funds, endowments, insurance companies, mutual funds and those portfolio/investment managers whose clients are predominantly institutional”.

A net short position suggests that real money investors, as a whole, expect the US dollar to weaken in the period ahead.

That means that in pure dollar value terms, at $US22.3 billion, this cohort has never been more bearish on the greenback’s prospects.

Khoon Goh and Rini Sen, FX Strategists at ANZ Bank, said the US dollar was sold against all major currencies apart from the Canadian dollar.

Net long positioning in the euro rose to a fresh record high while net positioning in the Japanese yen turned long for the first time since May 2015.

The CFTC report captured positioning as at the close of business on Tuesday, January 16.

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