US Dollar Bulls Regain Ground as Yen Bears Finally Flip

Futures traders have been cutting their net-long exposure to the US dollar by 63% in just six weeks, yet they remain long by $18.1 billion heading into last week's hot PPI and CPI reports.

The bigger shift came in Japanese yen positioning, where large speculators finally flipped to net-long for the first time since February. This change was likely influenced by renewed bets for a hawkish BoJ.

However, even with this shift, traders remain net long the dollar, and whether it can extend its bounce may now depend on whether the Fed signals a follow-up hike this week. The US-Canada trade tensions have also had an impact on Canadian dollar positioning.