USD longs retreat further - Rabobank

Jane Foley, Senior FX Strategist at Rabobank, lists down the IMM net speculators’ positioning as at 14 February, 2017.

Key Quotes

“EUR shorts increased for the first time since mid-January last week as uncertainties surrounding the French Presidential election injected some caution into the market. That said, shorts are still only 1/3^rd of the size registered at the start of last November. European political concerns had taken a step back in early January while stronger than expected German and Eurozone inflation data re-opened the debate about the appropriateness of easy ECB policy settings at the start of the year.”

“Net USD longs dropped to their lowest level since mid-October. Despite a recent pledge by Trump to outline new tax plans and hawkish comments from Fed officials, the USD has had a choppy ride.”

“Yen shorts have now dropped for seven consecutive weeks as post US election carry trades continue to reverse. Concerns regarding a drop in world trade, tensions in the S.China Sea and the potential for tapering pressures at the BoJ are all supportive JPY factors.”

“Bearish bets against the pound have crept higher for the second consecutive week. The spot market had regained some of its composure on the back of PM May’s Brexit speech in mid-January but nervousness could increase as PM May’s March 31 deadline for triggering article 50 nears. Additionally, there are increasing signs that inflation is eating away at demand.”

“CHF shorts last week dropped for a second consecutive week. The levels of shorts, however, is less than a half of 2016 year-end levels reflecting less interest in the carry trade.”

“CAD long positions more than doubled last week. Comments from US Presidential Trump that he will only tweak the NAFTA along its northern border is an encouraging signal. In addition, better jobs and trade data are encouraging. AUD long positions climbed for a fifth consecutive week on the back of higher commodity prices and the recent better trade data.”