Forex Trading Library

FX COT Update: EUR Shorts Build Ahead of ECB 2016-10-17

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This data references the period ending Tuesday, October 11th.

EURUSD

Non-Commercials increased their net short positions in the Euro last week selling a further 11.4k contracts to take the total position to SHORT 93k contracts. This latest wave of selling pressure in the Euro reflects both the upward pressure supporting the US Dollar at the moment as well as EUR-centric short-side bets. The US Dollar has traded higher over recent weeks as expectations for a 2016 rate hike continue to grow.

Last week’s FOMC minutes revealed that for many members, the decision to keep rates on hold was a “close call.” EUR downside bets continue to build as markets grow increasingly expectant of an extension to the bank’s QE program. The upcoming October rate decision and press conference on Thursday will take prime importance this week. Traders will be keen to hear the bank’s assessment of factors such as banking sector concerns, Brexit developments, and QE extension/tapering.

GBPUSD

Non-Commercials reduced their net short positions in Sterling last week buying 2k contracts to take the total position to SHORT 94k contracts. This slight reduction in selling pressure reflects the extreme level of short positioning in Sterling which remains at record levels.

Flows have been particularly choppy recently with reports last week on a potential softening of PM May’s stance on Brexit which will now see the government able to scrutinize her strategy, have seen some GBP buying kicking in. However, the PM has yet to confirm whether MPs will be able to vote on the strategy. For now, pressure remains to the downside.

USDJPY

Non-Commercials reduced their net long positions in the Japanese Yen last week selling 23k contracts to take the total position to LONG 46k contracts. This sharp reduction in topside bets comes amidst a wave of better risk appetite which has mainly been driven by firmer Oil prices. With investors moving back into riskier assets, demand for the safe-haven Yen has diminished. This has led to a weakening of the currency over recent weeks which will no doubt be welcomed by the BOJ.

USDCHF

Non-Commercials increased their net short positions in the Swiss Franc last week selling a further 6k contracts to take the total position to SHORT 9k contracts. This continued to build in short selling of the Swiss Franc again highlights the improved risk appetite of late which has seen a reduction in safe-haven inflow for the Swiss currency.

AUDUSD

Non-Commercials increased their net long positions in the Australian Dollar last week buying a further 2k contracts to take the total position to LONG 26k contracts. This marks the third consecutive week of buying for the Aussie which continues to remain supported.

The RBA have recently remained on hold and are largely expected to continue this stance for the rest of the year. Recent Chinese data has provided support for the Aussie which has also benefited from the Oil fuelled rebound in risk appetite. RBA meeting minutes and unemployment data will be the key focus this week.

USDCAD

Non-Commercials reduced their net short positions in the Canadian Dollar last week buying 2k contracts to take the total position to SHORT 12k contracts. This cessation of selling momentum in CAD reflects the positive Oil environment currently seen as optimism surrounding a slated OPEC deal continues to build.

Comments by Russian President Putin last week in support of the deal have added further buoyancy to the market as speculators continue to build long bets in Oil.The BOC rate decision is due this week though no change is expected. Traders will be keen to hear the bank’s latest assessment for any signs of whether more easing is likely to come this year.

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