Non-Commercials reduced their net long positions in the Euro last week selling 5k contracts to take the total position to 110k contracts. EUR has been consecutively net sold now for almost two months as the market continues to pare back upside risk in response to a more dovish sounding ECB. With data having moderated recently, the ECB has acknowledged a downturn in economic momentum over Q1 which has cast doubt on whether the bank will tie up its large asset purchase program at the September meeting, which is the current completion date. Selling pressure mounted after Draghi commented earlier this month that the bank stood ready to keep the program running for longer if necessary.
Non-Commercials increased their net long positions in Sterling last week buying 80 contracts to take the total position to 6k contracts. Following weeks of consecutive sales in GBP, bearish momentum finally paused this week. Bearish pressure built up recently in response to a dovish turn by the BOE who refrained from raising rates in May, as had been expected, and revised the growth forecast lower, in line with the recent downturn in data. However, the bank reaffirmed its commitment to raise rates further this year and traders will now be carefully monitoring data for signs that the BOE is back on track to raise rates.
Non-Commercials reversed their net long positions in the Japanese Yen last week selling 6k contracts to take the total position to -3k contracts. Positioning in JPY has been particularly choppy recently as the markets struggles to build a directional view amidst opposing market forces. A dovish shift by the BOJ, who recently abandoned its inflation target has created downward pressure, while an uptick in risk aversion due to political uncertainty in Europe and a re-emergence of concerns regarding North Korea has created upward pressure due to safe haven demand.
Non-Commercials increased their net short positions in the Swiss Franc last week selling a further 1k contracts to take the total position to -37k contracts. CHF has been under steady selling pressure over the last two months as the monetary policy divergence between the SNB and most of the other G10 central banks, has remained firm. The SNB has recently reaffirmed its commitment to keeping policy loose in Switzerland in order to keep the economy on track and to avoid any excessive strengthening of the Swiss Franc.
Non-Commercials reduced their net short positions in the Australian Dollar last week buying 2k contracts to take the total position to -21k contracts. Positioning in AUD has been quite volatile recently as the market has been grappling to get to terms with the RBA’s outlook. At its latest meeting the bank said that while policymakers now agree that the next move in rates will be up, significant risks remain, which saw the market slightly disappointed, fuelling selling. However, speaking this week, RBA member Ian Harper says that if the bank needs to raise rates it will do so despite what is happening in the housing market.
Non-Commercials increased their net short positions in the Canadian Dollar last week selling 3k contracts to take the total position to -26k contracts. The latest pull back in CAD positioning appears largely linked to the drop-in oil prices which have pulled back sharply over the last week. However, despite this lower adjustment, there are bullish signs as Canadian inflation printed above target for the third consecutive month, increasing expectations that the BOC will raise rates further in the coming months.