Net USD positions turned long, EUR longs strengthened - Rabobank

According to IMM net speculators’ positioning as at March 13, 2018, net USD positions have turned long for the first time since early January. 

Key Quotes

“This follows the trend in the spot market where the USD has been supported by talk of a more hawkish Fed. Fears of a global trade war have supported the USD vs. a number of high risk currencies.”

“EUR longs strengthened to their best levels since late January. Although ECB President Draghi has retained a dovish tone on policy, there is the possibility that the Eurozone’s large current account surplus will lend the EUR some safe haven behaviours.”

“Net GBP longs strengthened again. News that there has been a deal between the UK and EU on the Brexit Transition deal could support the pound further in the next set of data.”

“Net JPY shorts fell for a fourth consecutive week, moving to their lowest levels since September. Interest rate differentials should be negative for the JPY given the BoJ’s commitment to its QQE programme. That said, the market is doubting how long the Bank will maintain this position. Demand for safe haven remains a primary source of support for the JPY with fear of trade wars and a scandal involving Japan’s MoF becoming particular concerns in recent weeks.”

“CHF net shorts dropped further to their lowest level since October. Net positions have been in negative territory for thirty-two consecutive weeks. Falls in risk appetite tend to be CHF supportive but fear of SNB intervention could prevent strong surges in demand for the CHF going forward.”

“CAD longs consolidated. Oil prices, Nafta and trade wars remain in view as does the outlook for BoC policy.  Last week’s drop by the CAD in the spot market could be more evident in the next set of data.”

“AUD positions fell back into negative territory. The threat of global trade wars has created fresh anxiety this month week though exemptions from US tariffs on steel and aluminium have been granted for Australia and Canada.”