Non-Commercials increased their net long positions in the Euro last night buying a further 13k contracts to take the total position to 147k contracts. EUR long positioning is now back up to its highest levels of the year as the market readies itself for ECB monetary policy normalisation. Recent data has caused some market players to approach this view more cautiously however though ECB commentary remains upbeat and supportive.Traders now await the upcoming April ECB meeting for the bank’s latest assessment and outlook.
Non-Commercials increased their net long positions in Sterling last week buying a further 3k contracts to take the total position to 43k contracts. GBP continues to be steadily bid as investors respond positively to strong UK data and encouraging developments within the ongoing Brexit negotiations. The agreement on a transitional period for the UK was a positive surprise and with political uncertainty having receded the market is now once again focused on the BOE with a rate hike expected at the May meeting. Focus this week will be on wage data due on Tuesday followed by Inflation data due on Wednesday.
Non-Commercials reduced their net long positions in the Japanese Yen last week selling 1k contracts to take the total position to 3k contracts. JPY positioning has undergone a monumental shift over recent weeks with last year’s record short position having been rapidly unwound in the face of a potential shift in BOJ policy. With BOJ’s Kuroda having mentioned that the bank will discuss dismantling its ultra-loose monetary policy by the end of fiscal year 2018. Risk sentiment remains a key driving factor for JPY and so traders will be keenly following the Abe-Trump meeting due this week, focusing on US – Japan trade relations and North Korea issues.
Non-Commercials increased their net short positions in the Swiss Franc last week selling a further 1k contracts to take the total position to -11k contracts. CHF has once again come under selling pressure as SNB chief Jordan commented at the bank’s latest meeting that it is still too early to change policy it wants to avoid fuelling an appreciation of the Franc given that the “situation remains fragile in the foreign exchange market”.
Non-Commercials increased their net short positions in the Australian Dollar last week selling a further 3k contracts to take the total position to -3k contracts. AUD has now been net sold for three consecutive weeks as the market responds to deteriorating risk sentiment in light of the intensifying trade war between China and the US which has seen equity and commodity prices crashing. Adding further pressure is the fact that the RBA is still not giving any hawkish signals. In its latest review of the state of the financial system the bank said that although financial risk is easing, high household debt is still a concern and poses an obstacle to policy normalisation. In the review the RBA concluded that “The ratio of total household debt to income has increased by almost 30 percentage points over the past five years to almost 190%, after having been broadly unchanged for close to a decade,”
Non-Commercials reduced their net short positions in the Canadian Dollar last week selling .2k contracts take the total position to -32k contracts. Investors are erring on the side of caution ahead of the BOC’s upcoming April meeting which is widely expected to see the bank keep rates unchanged while reaffirming its data-dependent stance and cautious outlook due to US trade protectionism and slowing of the domestic housing market.