USD net shorts rose, GBP and JPY shorts decreased - ANZ

According to the CFTC positioning data for the week ending 19 September 2017, leveraged funds continued to sell the USD for the second consecutive week in the run up to the FOMC meeting, notes the analysis team at ANZ.

Key Quotes

“Overall net short USD positions rose by USD0.9bn to USD8.4bn. However, the CFTC cut-off date was prior to the hawkish FOMC statement on 20 September which saw the Fed keep its dot plots unchanged for this year and the next. With this, market odds of a December rate hike have climbed to around 63% and we are likely to see some paring back in net short dollar positions in the coming week.”

“Dollar selling was largely concentrated against the pound and the yen. Funds decreased their net short GBP and JPY positions by USD2.7bn and USD1.5bn to USD0.4bn and USD3.8bn, respectively. However, GBP price action following Moody’s rating downgrade of the UK could see net shorts re-build in the coming weeks. Meanwhile, Japan continues to benefit from safe-haven demand as geopolitical tensions over North Korea remain. CHF also saw net buying in the week.”

“EUR saw the largest net selling during the week. Net EUR longs were reduced by USD3.6bn to USD0.2bn, the largest weekly net selling since October 2016.”

“Commodity currencies saw a third straight week of net selling, led by the NZD and AUD. AUD net longs were reduced by USD0.2bn to USD6.4bn, despite market optimism that the Reserve Bank of Australia will soon join the tightening cycle. Net long NZD positions were pared for the seventh consecutive week, by a further USD0.5bn to USD0.2bn ahead of the general elections. However, CAD bucked the trend, with an increase in net longs by USD0.6bn to USD4.3bn.”

‘Funds turned net sellers of EM currencies after four straight weeks of net buying. At USD1.6bn, MXN saw the largest weekly net selling since 2011, in line with its weak price action. Meanwhile, RUB and BRL saw net buying and selling, respectively.”

“Net long gold contracts were trimmed after nine straight weeks of buying. Net longs in 10-year USTs rose further even as yields continued to inch up, while net long crude contracts rose, in line with the pick-up in crude oil prices.”