FX COT Update: Institutions Turn Net Short JPY For The First Time Since 2016

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Net Short JPY For The First Time Since 2016

EURUSD

Non-Commercials reduced their net long positions in the Euro last week selling 7k contracts to take the total position to 134k contracts. This latest reduction in Euro long exposure comes despite the ECB recently confirming that it has now shifted away from the easing bias that has been in place since the global financial crisis. Due to “broad based growth momentum” in the eurozone, ECB chief Draghi said that the bank will now look to normalise policy accordingly. This view has been well signalled, and the confirmation of such a shift in perspective has been unable to fuel any further gains in the Euro. Traders will now continue to watch incoming data as a means to gage the next likely move by the ECB.

Net Short JPY For The First Time Since 2016 EURUSD

Focus this week will be on the ECB meeting minutes, due on Thursday where traders will be hoping for greater detail on the bank’s outlook. Despite the reduction in upside exposure, the minutes present hawkish risks and should traders gain any new information from the minutes release this is likely to fuel a further EUR bid.

GBPUSD

Net Short JPY For The First Time Since 2016 GBPUSD

Non-Commercials increased their net long positions in Sterling last week buying 6k contracts to take the total position to 40k contracts. GBP has been consistently bought over the last month as investor sentiment has undergone a strong shift. Positive developments within the Brexit negotiations landscape as well as increased expectations of a BOE rate hike in May have boosted demand for GBP which, in positioning terms, was almost back to neutral just over a month ago.

USDJPY

Net Short JPY For The First Time Since 2016 USDJPY

Non-Commercials reversed their net short positions in the Japanese Yen last week buying 7k contracts to take the total position to 3.5k contracts. Investors have now turned net long the Japanese Yen for the first time since 2016 as the market adjusts its view to account for the shifting global monetary policy landscape. For the first time, BOJ chief Kuroda recent commented that the bank will be considering dismantling its ultra-loose monetary policy into the end of fiscal year 2018 which is the first time that such a timeframe has been mentioned.

USDCHF

Net Short JPY For The First Time Since 2016 USDCHF

Non-Commercials increased their net short positions in the Swiss Franc last week selling a further 0.5k contracts to take the total position to -10k contracts. CHF has been under selling pressure over the last few weeks following comments from SNB’s Jordan warning against the potential for excessive CHF strengthening (due to safe haven demand) in response to trade wars sparked by Trump’s protectionist trade policies.

AUDUSD

Net Short JPY For The First Time Since 2016 AUDUSD

Non-Commercials reversed their net long positions in the Australian Dollar last week selling 8k contracts to take the total position to -0.1k contracts. Sentiment has rapidly reversed in AUD once again. Despite bulls continued attempts at optimism, there are as yet just no solid signs that the RBA is close to normalising policy, despite the moves being made by some of the other g10 central banks, and as such, traders are reacting with disappointment. Added to this is the recent fall back in risk sentiment as equity price and commodity priced have tumbled in response to the escalation of the trade dispute between the US and China.

USDCAD

Net Short JPY For The First Time Since 2016 USDCAD

Non-Commercials increased their net short positions in the Canadian Dollar last week selling a further 5k contracts to take the total position to -32k contracts. Despite the BOC being well into their policy normalisation program, sentiment has taken a turn for the worse in CAD with positioning now down over 100% in just three weeks as the market reacts to Trump’s aggressive trade policies. Although Canada is yet to bear the brunt of Trump’s protectionism, traders are concerned about the potential for disruption to Canadian exports which are already suffering from the decline in Oil prices over the last few weeks.

 

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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.

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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.

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