FX COT Update: EUR Longs Cut Further…

As Trade Uncertainty And Political Turmoil Weigh On Investor Sentiment

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 EURUSD

eurusd

Non-Commercials reduced their net long positions in the Euro last week selling 2k contracts to take the total position to 34k contracts. EUR long positioning continues to be steadily reduced as the market digests the ECB’s announcement at its last meeting that it will be winding down QE by year end but plans to keep rates unchanged until at least summer 2019. Alongside this, investor sentiment towards EUR has shifted lower due to heightened uncertainty linked to the ongoing trade dispute between the EU and the US as well as political turmoil within the EU.

GBPUSD

gbpusd

Non-Commercials increased their net short positions in Sterling last week selling 2.5k contracts to take the total position to -21k contracts. GBP has been net sold for three of the last four weeks as the market continues to grapple with opposing forces of Brexit uncertainty, which is adding bearish pressure, and buoyant expectations of a BOE August rate hike, which is adding bullish pressure. Recent BOE commentary has been supportive of an August rate hike in line with recent data which has printed firmly, keeping bulls hopeful of a hike.

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USDJPY

usdjpy

Non-Commercials reduced their net short positions in the Japanese Yen last week buying 1k contracts to take the total position to -34k contracts.  This week of buying follows a week of huge sales in JPY and shows that for now the market is happy to continue to be short JPY, reflecting the fact that BOJ dovishness is playing more of a role as a driver of price than safe haven inflows are. Increased uncertainty linked to the global trade environment continues to provide sporadic demand in JPY but for now the market is mainly focused on the BOJ which continues to keep an easing bias in place.

USDCHF

usdchf

Non-Commercials increased their net short positions in the Swiss Franc last week selling 6k contracts to take the total position to -38k contracts. CHF has been under steady buying pressure over the last month, prior to last week’s sales, as safe haven inflows have increased given the elevated level of global uncertainty linked to Trump’s trade policies.  The SNB continues to reaffirm its commitment to maintaining a presence in the market as necessary in order to protect against any excessive strengthening of the Franc and for now there are no signs that a shift in policy is on the cards.

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AUDUSD

audusd

Non-Commercials reduced their net short positions in the Australian Dollar last week buying 2k contracts to take the total position to -41k contracts. Positioning adjustments in AUD have been fairly volatile over recent weeks as the market adjusts to the dynamic trade war environment between the US and China, Australia’s largest trading partner. At its last meeting the RBA kept rates unchanged with a mostly unchanged statement from last time around though the tone of the statement took a subtly more bearish tone with the bank highlighted various risks from both the external and domestic environment.

USDCAD

usdcad

Non-Commercials increased their net short positions in the Canadian Dollar last week selling a further 19k contracts to take the total position to -33k contracts. Last week’s adjustment saw the market more than doubling its short exposure as heightened uncertainty around the trade dispute between Canada and the US as well as domestic data weakness has caused an unwinding of BOC July rate hike expectations. The bank meets this week and following last Friday’s data which saw the unemployment rate rising to 6% from 5.8% over the prior month the chances of a hike have diminished further.

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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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