Dollar Longs Cut as US Treasury's Bond Buyback Announcement Triggers Sharp Reversal

The US Treasury's surprise bond buyback announcement triggered a sharp reversal in dollar long positions. Speculators reduced their aggregate dollar long by USD 8.3 billion to USD 27.6 billion, with short covering in the euro, Canadian dollar, Swiss franc, and New Zealand dollar leading the decline. The Japanese yen saw continued selling amid unfavourable US-Japan rate differentials.

The agriculture sector saw a record surge in managed-money net long positions, jumping at the fastest pace on record. Corn, sugar, cotton, and Kansas wheat reached multi-year positioning highs, while CBOT wheat remained net short ahead of an 11% price surge due to worsening Black Sea supply risks.

Metals and energy positioning diverged, with gold futures buying relatively restrained despite a 6.2% rally. Copper length eased from elevated levels, and funds cut Brent longs by 11% as increased Hormuz flows reduced the Middle East risk premium.