Bullish bets on EUR continue to rise, USD longs trimmed - Rabobank

Research Team at Rabobank lists down the IMM net speculators’ positioning as at 28 March, 2017.

Key Quotes

“Rapidly fading concerns about political risks in Europe and an encouraging set of Eurozone data led to a further sharp fall in bearish bets against the euro. Net EUR shorts plunged to just 7.9k as of March 28 from an already low 19.7k in the previous week. Following the favourable market outcome of the Dutch general election, investors increased their long EUR positions to the highest level so far this year. With opinion polls consistently showing that anti-EU Marine Le Pen is unlikely to win the presidential election in France, the euro appreciated against the US dollar to a year-to-date high at 1.0906 in the second half of March before trimming its gains.”

“The health bill debacle on Capitol Hill raised market concerns about the prospects for crucial tax cuts, infrastructure projects and deregulation. Consequently, net USD longs have been trimmed to 44.21k – the lowest since the start of the year. For the DXY Index to regain upside momentum the Trump administration would have to reveal concrete details regarding its fiscal measures. Upbeat tweets from the White House fully of pledges to generate more jobs are not sufficient at this stage to reignite the bullish momentum in the US dollar. Comments following a meeting between US President Trump and Chinese President Xi on Friday may also set the tone for the markets.”

“Net GBP shorts increased sharply before Prime Minister May sent a letter to European Council President Tusk to officially inform that the UK intends to leave the EU. While sterling actually appreciated last week on the back of short-covering pressures, we maintain our bearish view, particularly against the euro, as uncertainty regarding the final Brexit deal is set to prevail.”

“Following the failure of the Trump administration to repeal and replace Obamacare USD/JPY plunged to the lowest level so far this year in the second half of March in line with a fall in net short positions.”

“The sharp move lower in USD/CAD on March 15 was followed by a consolidation in the second half of the month. That said, there was a shift in market positioning from a modest net long positions to shorts to reflect bearish views on the US dollar.”