Bulls pare positions in CAD, EUR and NZD as JPY shorts cover - Scotiabank

According to the CFTC data which covers up to Tuesday August 15 & were released Friday August 18, positioning adjustments appear to be dominated by profit taking among CAD, EUR, and NZD bulls alongside an accelerated pace of short covering for JPY bears, notes the research team at Scotiabank.

Key Quotes

“The cumulative impact has provided for a modest narrowing in the aggregate USD short, the first following an unbroken run of deterioration since mid-June. EUR, AUD, CAD, MXN and NZD are held net long, CHF is flat, while JPY and GBP are held net short.”

“CAD sentiment has deteriorated for the first time since late May with a $0.9bn w/w narrowing in the net long. The bullish position remains elevated at $4.0bn around the upper end of its multi-year range. Details are suggestive of profit taking, with the bulk of this week’s adjustment driven by a $1.0bn decline in gross longs.”

“EUR bulls also took profit this week, reducing gross longs by $1.6bn and driving the bulk of the $2.1bn w/w deterioration in the net long to $11.6bn. Gross longs have been pushing to fresh record highs since March. The net long position remains somewhat extended, leaving EUR vulnerable to further adjustment.”

“Bearish JPY positioning continues to moderate with a fourth consecutive week of short covering. The pace is accelerating and this week’s report details a $2.1bn narrowing in the net short to $8.8bn. The position has narrowed a cumulative $5.4bn over the past four weeks, the result of a halving in the number of gross longs established since mid-June.”