Long Asia FX positions rise as US political woes dampen dollar

Investors raised their long positions in some Asian currencies compared with two weeks ago, a Reuters poll showed on Thursday, after the dollar was bruised by political turmoil in Washington and softer-than-expected economic data. Long positions in the Chinese yuan rose slightly from two weeks ago and reached the largest since July 2015, while Taiwan dollar long positions increased to the biggest since February 2011.
Investors were estimated to have long positions in all nine Asian currencies covered by the Reuters poll, which surveyed 15 analysts and traders. Singapore dollar long positions nearly doubled from two weeks ago to the largest since March 2016, while bets on the Philippine peso turned slightly bullish, the first bullish peso positioning since September 2016.
That shift, and increases in bullish bets in some Asian currencies, came after the dollar hit a six-month low against a basket of six major peers on Wednesday, pressured by concerns that the US political tumult could delay efforts by President Donald Trump to implement his economic stimulus plans.
Pressure on the White House has intensified after Trump fired FBI Director James Comey, who had been leading a federal probe into possible collusion between Trump's 2016 campaign team and Russia. Later, Washington was rocked by reports that Trump had asked Comey to end the FBI investigation into ties between Trump's first national security adviser, Michael Flynn, and Russia. That raised questions about whether the president improperly attempted to interfere with a federal investigation.
The Justice Department has named former FBI chief Robert Mueller as special counsel to investigate the alleged Russian interference. Tensions in Washington and softer-than-expected US economic indicators such as retail sales, consumer inflation and housing starts in the past week have cooled expectations the Federal Reserve will raise interest rates in June.
The Asian currency positioning poll is focused on what analysts and fund managers believe are the current market positions in nine Asian emerging market currencies: the Chinese yuan, South Korean won, Singapore dollar, Indonesian rupiah, Taiwan dollar, Indian rupee, Philippine peso, Malaysian ringgit and the Thai baht. The poll uses estimates of net long or short positions on a scale of minus 3 to plus 3. A score of plus 3 indicates the market is significantly long US dollars. The figures include positions held through non-deliverable forwards (NDFs).