USD short positions increased, EUR net longs dropped - Rabobank

According to IMM Net Speculators’ Positioning as at October 17, 2017, speculators’ net short USD positions increased moderately last week but remain essentially consolidative just below their recent high, notes the research team at Rabobank.

Key Quotes

“In late September shorts increased to their highest level since April 2014 despite the hawkish signals from the Fed. The choice of the next Fed Chair in addition to speculation regarding the ability of the GOP to push through tax reform this year remain in view.”

“Having rallied for three consecutive weeks EUR net longs have dropped back, though they remain elevated. Tensions in Catalonia have weighted on the EUR and remain a negative factor. The outcome of the ECB meeting is likely to be a big influence for the next set of data.”

“Net GBP positions eased for a second consecutive week, though they remain in positive territory on the back of expectations of a BoE rate hike next month. PM May is battling a widespread perception that not much progress has been managed on Brexit talks. Deep divisions in the cabinet are also weighing on sentiment.”

“Net JPY short positions dropped a touch in the approach to the weekend’s election in Japan. The resounding victory for PM Abe has boosted risk appetite and suggests that JPY shorts have the potential to climb further in the next set of data.”

“CHF positions remained in negative territory for an eleventh consecutive week. This is consistent with higher levels of risk appetite and a backdrop of solid growth in the Eurozone. The worries around Catalonia may have some impact going forward.”

“CAD longs slipped modestly but remain elevated. Canadian CPI inflation has risen, though on balance economists are favouring steady policy from the BoC this week. AUD longs dropped back for a third consecutive week. Q3 CPI inflation data are a focus for the week ahead, although there is little chance of a RBA policy move in the foreseeable future. Chinese economic data and prices of iron ore and coal also remain in focus.”