USD longs steady, JPY shorts edged lower - Rabobank

According to IMM net speculators’ positioning as at 20 June, 2017, USD longs held steady, holding just above their late May levels which were their lowest levels since last Oct – ahead of the Trump win in the Presidential election, explains the research team at Rabobank. 

Key Quotes

“The relatively soft level in long positions reflects domestic political concerns and some disappointments in domestic economic data. The more hawkish than expected tone of the FOMC last week could lend some support in the next release.”

“Bearish bets against the pound increased for a third week marking a clear break from the trend that prevailed for the previous six weeks. The weaker tone of GBP is a response to the Government’s failure to hold its majority at the June 8 general election. Opinions polls had been suggesting that the Labour opposition was gaining momentum ahead of the election. While this increases the likelihood of a more messy Brexit process, GBP has found some support on speculation that a ‘soft’ Brexit may now be more likely.”

“For an eighth consecutive week, EUR longs have remained on their upward path. Macron’s success in the French parliamentary election has strengthened the better tone, although the dovish tone of the ECB at the June policy meeting could temper the bullish tone. EUR positions are at their strongest level since May 2011.”

“JPY shorts edged lower but remained within recent ranges. The BoJ retained a dovish tone at its June policy meeting. Irrespective, changing demand for safe haven remains a primary influence. Geopolitical uncertainty in the Gulf region, political uncertainty in the US or further testing of nuclear missiles by N. Korea could offer support to the JPY going forward.”

“CHF shorts dropped for a fourth consecutive week. The improvement in the Eurozone economy should over time reduce safe haven demand for the CHF. However, for now the CHF appears to be moving in the same direction as the EUR.”

“CAD shorts dropped for a third week, in contrast to the twelve week trend that dominated the spring. Some hawkish comments from the BoC could lend support, but the outlook for price of oil remains a key influence. AUD positions held their position in negative territory despite better than expected Australian Q1 GDP growth data.”