Traders reducing bets against the USD

Short positioning still stretched though

Chart of the Day

The USD has appreciated in the past couple of weeks, against most currencies, as real yields moved in its favor, but as this chart shows positioning against the USD is still stretched. If traders start to unwind their positions more quickly, then it could cause a much more rapid appreciation of the USD in the coming weeks.

Macro

The February non-farm payrolls report showed a 379,000 increase. That was an improvement from the 166,000 rise in the prior month, but still left employment 6.2% lower than a year earlier.

Markets havn’t really cared about the labor market weakness, because incomes are doing very well. For example, the US personal income and spending data for January showed income growth accelerated to 16.1% YoY, while consumption growth rose to 6.8% YoY. Those numbers could jump even further with the $1,400 checks set to be sent out by April.

The January trade data showed exports rose by 1.0% MoM and imports increased by 1.2% MoM. That left imports 3.2% higher than a year earlier, but exports are still weak.

China's trade data, for January and February combined, showed export growth rose sharply to 60.6% YoY, while import growth increased to 22.2% YoY. The rises were partly due to the base effect from the slump last year, but still much stronger than the survey estimates.

Markets

Moves in the major commodities in the past week have ranged from -4.8% for platinum to +10.0% for gasoline, and strong gains for oil prices.

Brent is now within touching distance of $70.

Compared to their long-run positions in various commodities, non-commercial traders are still fairly negative on gasoline.

Traders slashed their long position in the 10-year treasury last week, and now have a modest short position in that and a large short in the 30-year bond.

They have also slashed their net long in the Nasdaq.

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