As the US Federal Reserve, Bank of England, and Bank of Japan make critical decisions this week, a surprising shift in speculative positioning has left the dollar with an unexpected boost. According to data from the Commodity Futures Trading Commission (CFTC) for the week ended September 15, aggregate speculative USD longs plummeted by $13.5 billion to $5.9 billion, the lowest since mid-May. This sudden unwind comes just before these central banks make decisions that could have a significant impact on global markets.

The drop in speculative long positions is notable, especially given the earlier unwind in early August. While it’s true that the dollar has been experiencing a slight resurgence since mid-August, this latest development suggests that positioning may be shifting in favor of the greenback. As shown in the accompanying chart from Scotiabank, the dollar is now poised for an aggressive comeback.

It’s worth noting that these central bank decisions could also have a significant impact on other currencies, particularly those seen as alternatives to the dollar. As the Fed, BoE, and BoJ make their moves, it will be crucial to monitor positioning in these currencies to gauge any potential shifts in market sentiment.