Traders Trim Dollar Exposure as CAD Strengthens and JPY Shorts Return

The latest COT report shows that traders are trimming their exposure to the US dollar, rebuilding long positions in the Canadian dollar, and cautiously returning to shorts on the Japanese yen.

According to the report, large speculators reduced their net-long exposure to the US dollar by $1.2 billion to $34.3 billion for a third week, while asset managers increased their net longs in EUR/USD to a five-week high of 23.7k contracts.

In contrast, USD/CAD saw a significant reduction in net shorts, falling by 30.2k contracts, likely due to improving economic data and rising crude oil prices.

The report also notes that futures traders have been reacting to the move rather than anticipating it, as the Canadian dollar has already been rising for seven weeks.