FX COT Update: BOC Hawkishness Fading

Posted on

EURUSD

Non-Commercials reduced their net long positions in the Euro last week by selling 0.9k contracts, taking the total position to 84.5k contracts. The main focus this week will be the ECB meeting minutes with traders who are keen to receive further information following the bank’s latest policy announcement. The market reacted with disappointment when the ECB announced its tapering plans but confirmed that QE will run at a slower pace for longer. If the minutes show that the bank considered a heavier reduction, EUR is likely to be supported.

GBPUSD

Non-Commercials reduced their net short positions in the British Pound last week by buying 4.6k contracts, taking the total position to -5k contracts. The key focus this week will be the UK budget announcement due on Wednesday. The expectation is a reduced growth forecast in line with softer productivity growth. UK data continues to highlight positive momentum in the economy, leading some to feel that the market is under-pricing the BOE’s rate path.

USDJPY

Non-Commercials increased their net short positions in the Japanese Yen last week by selling 8k contracts, taking the total position to -136k contracts. JPY continues to be heavily sold as the monetary policy divergence between the BOJ and the rest of the G10 central banks grows. The BOJ has reaffirmed its commitment to easing via its joint approach of QQE with yield curve control.

USDCHF

Non-Commercials increased their net short positions in the Swiss Franc last week by selling 3k contracts, taking the total position to -28k contracts. Along with the Yen, the Swiss Franc has been heavily sold as the SNB’s easing stance keeps the market motivated to sell. The bank continues to view the Franc as overvalued and has said that it will remain active in the market for as long as necessary to prevent further strengthening of the currency.

AUDUSD

Non-Commercials reduced their net long positions in the Australian Dollar last week by selling 1.4k contracts, taking the total position to 44k contracts. Market sentiment is turning sharply on the Aussie as data weakness and RBA concerns have fuelled a dampening down of the hawkish expectations which, in turn drove investor purchases over the first half of the year.  On the data front this week, focus will be on Q3 capital expenditure which is expected to have declined in line with the RBA’s guidance. RBA Governor Lowe is also speaking and traders will be keen to hear any further details following his recent cautioning on subdued inflation and weak wage growth.

USDCAD

Non-Commercials reduced their net long positions in the Canadian Dollar last week by selling 4k contracts, taking the total position to 47k contracts. While the BOC has raised rates twice this year, expectations for a further rate increase have dwindled over recent months due to data weakness. The BOC continues to express caution and has told the market that further rate rises will be data dependent. The key focus this week will be closure of the fifth round of NAFTA negotiations.

(Visited 35 times, 1 visits today)

With over 6 years’ experience analysing currency markets, James is now a well-known industry analyst focusing on price action trading and fundamental drivers. Beginning as a private retail trader, James developed a strong interest in understanding the fundamental aspect of the market before pursuing technical trading capabilities which he now uses to identify opportunities over a short-term horizon. Alongside his market experience, James is also IMC certified having achieved the qualification to help further his understanding not only of the markets but the industry as a whole. James has a strong interest in both fundamentals and technicals and uses both forms of analysis in generating and executing trade ideas, with trades generally lasting from a few hours to a few days.

START TRADING

or practice on DEMO ACCOUNT

Trading CFDs Involves high risk of loss

With over 6 years’ experience analysing currency markets, James is now a well-known industry analyst focusing on price action trading and fundamental drivers. Beginning as a private retail trader, James developed a strong interest in understanding the fundamental aspect of the market before pursuing technical trading capabilities which he now uses to identify opportunities over a short-term horizon. Alongside his market experience, James is also IMC certified having achieved the qualification to help further his understanding not only of the markets but the industry as a whole. James has a strong interest in both fundamentals and technicals and uses both forms of analysis in generating and executing trade ideas, with trades generally lasting from a few hours to a few days.

© Orbex