USD shorts rising, EUR longs pushed higher - Rabobank

According to IMM Net Speculators’ Positioning as at August 8, 2017, for the third consecutive week net USD positions held in negative territory, with shorts rising to their highest level since April 2014, notes the analysis team at Rabobank. 

Key Quotes

“Weak US inflation data and the pull of low bond yields are weighing on the USD with the crisis of words between the US and N. Korea having little discernible impact on last week’s data.”

“GBP shorts eased moderately, though they remain largely consolidative. Against a backdrop of strengthening world growth, UK economic data have been generally sluggish. Slowing growth and news that 2 rather than 3 members of the MPC voted for an immediate rate hike in August have weighed on the pound in the spot market.”

“EUR longs pushed higher again last week to reach their highest levels since 2007. Better Eurozone economic data and Macron’s success in the French parliamentary election have triggered a rotation back into the EUR this year. Focus is firmly on the ECB and any hint that it is preparing to taper its QE programme next year.”

“JPY shorts dropped for a third week amid a rise in tension between the US and N.Korea. The BoJ has maintained very dovish rhetoric in contrast to several other central banks. However, demand for safe haven remains a primary influence for the JPY.”

“CHF positions fell back into negative territory probably. The improvement in the Eurozone economy should over time reduce safe haven demand for the CHF. However, this outlook is now complicated by tension between the US and N.Korea.”

“CAD longs continue to march forward as the market debates whether the BoC could be prepared to hike rates again soon. AUD longs consolidated. The previous week they had moved to their strongest level since April 2013 supported by this year’s recovery in iron ore and coal prices.”