MUFG Research discusses the USD outlook from the positioning front and maintains a bullish bias in the near-term.
"The release of the latest IMM positioning report at the end of last week revealed that Asset Manager/Institutional investors had started to rebuild short US dollar positions in the week ending 3rd August. Total short US dollar positions increased by 28,233 contracts to 310,328 contracts. It brought an end to four consecutive weeks in which short US dollar positions had been scaled back. Short US dollar positions still remain well below the recent peak from the start of June at 586,589 contracts," MUFG notes.
"We expect the US dollar to remain bid in the near-term and to continue challenging short positions that have been built up. Position unwinding could be less important though in driving upward US dollar momentum after the large position adjustment that has already taken place in recent months," MUFG adds.