Piotr Matys, EM FX Strategist at Rabobank, lists down the IMM Net Speculators’ Positioning as at 23 August 2016.
Key Quotes
“While the bearish bets against the pound increased to the highest level so far this year in the middle of August, it seems that much better than expected UK data published recently discouraged speculators. Consequently, the GBP net short positions remained virtually unchanged at 94,978 as of August 23. Given that the market is overwhelmingly short GBP, GBP/USD will be more sensitive to positive news about the UK economy.
EUR shorts fell for a fourth consecutive week to the lowest level since early July. That said, we maintain our modestly bearish view on EUR/USD seen falling to 1.09 in 6m and to 1.07 over the 12m period with the Fed seen raising rates and the ECB providing more stimulus.
As reflected in relatively low net USD longs at just 15,968, market participants are not convinced that the Fed will raise rates in the coming months. The implied probability of a move in September and October is still well below 50% before rising to more than 60% for the December meeting, which remains our baseline scenario.
Despite growing market skepticism about the efficiency of BoJ’s monetary policy easing, Governor Kuroda argued recently that there is “ample space for additional easing”. It remains to be seen whether dovish comments from Kuroda prevent market players from building net JPY longs, which increased to the highest level since early July.”
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