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USD bullishness is back to early 2014 levels - JPMorgan

FXStreet (Bali) - USD bullishness is back to early 2014 levels, notes FX Strategists at JPMorgan.

Key Quotes

"It’s hard to remember a market theme of the past few years which is so universally embraced one month and so universally maligned the next as the bearish Treasuries/bullish USD trade of early 2014. Don’t look or listen now, but it's back. Measured by IMM positions, USD longs are larger now than in early 2014, though at least shorts in the Treasury market are much smaller."

"Should anyone care? We’ve argued before that consensus trades aren’t constraints on a trend just because they are widely held. The empirical way to highlight this is with contrarian trade rules based on market positioning. If positioning were a sufficient condition for market reversal, then shorting over- owned currencies and buying under-owned ones would generate consistent profits."

"That strategy applied to IMM positions, for example, delivers success rates below 50% for the majority of currencies, which is why we track the IMMs but don’t tend to follow the signals without a macro or policy trigger."

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