USD shorts fell further, CAD longs have edged lower - Rabobank

According to the IMM Net Speculators’ Positioning as at December 12, 2017, USD shorts fell further from their late November high, notes the research team at Rabobank.

Key Quotes

“The USD has performed well in the spot market on news of progress with the Republican’s tax reform package, though there are signs of the optimism running out of steam.”

“Not since May 2007 have EUR speculators’ longs been stronger. Ahead of last week’s ECB meeting speculators extended their EUR positions on the hope of some less dovish rhetoric. In the event, ECB President Draghi maintained a dovish outlook, though Eurozone growth estimates were revised higher.”

“Net GBP longs pushed further into positive territory on optimism surrounding Brexit negotiations. The EU has given the green light for EU/UK trade talks to start. These will commence with the 2 year transitional period that is due to start in March 2019. Although progress has been made, trade talks are likely to be tough and could expose cracks in PM May’s cabinet.”

“Net JPY shorts consolidated below their recent highs. This week’s BoJ policy meeting is in view. Although commitment to QQE is expected to be repeated, there is some speculation as to whether the BoJ will signal it wants to fine tune its policy in 2018.”

“CHF positions have been in negative territory for nineteen consecutive weeks. Although positions have consolidated in recent weeks, their size is significantly larger than in mid-October. 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, and concerns about German politics have eased.”

“CAD longs have edged lower for a second week. In the spot market, the CAD has been knocked around by speculation regarding BoC interest rate policy. Oil prices have failed to offer much influence recently.”

“AUD longs consolidated. The strength of domestic jobs data has reignited speculation that the RBA could be persuaded to bring forward an interest rate hike.”