• The latest IMM data covers the week from 21 to 28 July.
    • Speculative investors have increased their bets that the Canadian dollar will continue its rally. Net long positions were expanded by USD1.2bn, implying that speculative net long positions now stand at 32% of total open interest – the highest since June last year. This indicates to us, however, that positioning has become a liability in relation to a further CAD outperformance against both the dollar and the $-block in general.
    • EUR/USD tested 1.43 on 28 July, but failed to break higher and was sent temporarily lower. This is likely to have affected the IMM data, which was collected on 28 July, and possibly explains the reduction in EUR longs.
    • The recent pick-up in risk appetite has helped push USD/JPY higher, though perhaps to a lesser extent than could be expected, and speculative investors have reduced their net long JPY positions – which nonetheless remain above 25% of open interest.
    • In general, speculative investors are still positioned for an improvement in risk sentiment as witnessed by the significant long positions in EUR, AUD, CAD and NZD. This, however, also implies that these currencies remain at risk in the case of a setback in risky assets. This is not least the case for NZD where long positions look quite crowded.