USD positions lifted, EUR longs increased - Rabobank

According to IMM net speculators’ positioning as at November 7, 2017, speculators turned positive on the USD last week for the first time since mid-July and is a continuation in the improvement in sentiment that has lifted net USD positions since October, explains the research team at Rabobank. 

Key Quotes

“Hopes for US tax reform have been mixing with market expectations of a December rate hike by the Fed. That said, news of a possible delay to a cut in US corporation tax disappointed the market towards the end of last week.”

“Speculators also increased their net EUR longs, in contrast to the recent trend.   The tone of ECB President Draghi at the October 26 policy meeting was more dovish than the market had expected. However, recent growth data has been strong in the Eurozone.”

“Net GBP positions dropped back into negative ground. The BoE delivered a 25 bps rate hike on November 2. However, the sentiments expressed by the Bank were dovish, limiting scope for GBP gains. UK politics surrounding the May leadership and Brexit talks are also looking uneasy.”

“Net JPY shorts have increased for a third week to their highest level since January 2014. A decline in geopolitical risk, strengthening risk appetite on the back of strong world growth and accommodative policy conditions at the BoJ have supported the use of the JPY as a funding currency. That said, risk appetite edged a lower in the spot market towards the end of last week.”

“CHF positions have been in negative territory for fourteen consecutive week and the size of these positions has grown significantly over the past three weeks. This is consistent with higher levels of risk appetite and a backdrop of solid growth in the Eurozone. The worries around Catalonia have not triggered contagion.”

“CAD longs have slipped for a fourth week as the market looks ahead to a period of steady policy from the BoC. AUD longs have fallen back for a sixth consecutive week. The RBA has indicated there is little chance of a near-term policy hike. Chinese economic data and prices of iron ore and coal remain in focus.”