Non-Commercials reduced their net long positions in the Euro last week selling 2k contracts to take the total position to 34k contracts. EUR has now been net sold for each consecutive week over the last month as the market has adjusted its view in line with the ECB’s declaration that rates will be on hold until at least summer 2019. At the bank’s last meeting, Draghi confirmed that the ECB will be ceasing its huge asset purchase program by the end of year but also highlighted that rates will remain at current levels which caught the market off guard and fuelled a wave of EUR sales.
Non-Commercials increased their net short positions in Sterling last week selling 2k contracts to take the total position to -22k contracts. Sentiment has turned increasingly bearish for GBP as uncertainty around the ongoing Brexit negotiations continues to weigh. However, aside from the Brexit landscape, other elements are more constructive for GBP with the BOE widely expected to raise rates at the upcoming August meeting in line with positive data. The bank received positive endorsement with the recent upward revision to Q1 GDP which further strengthens the chances of a summer rate hike.
Non-Commercials reduced their net short positions in the Japanese Yen last week buying 1k contracts to take the total position to -34k contracts. Despite the recent dovish shift from the BOJ who removed the target time-frame for its inflation objective of 2%, interpreted by the market as a sign of the bank having lost confidence in its ability to boost inflation, JPY has seen some buying kicking back in due to safe haven demand. Though not engaged with the US directly, the souring global trade environment has seen investors turning back towards the Yen which is traditionally used as a safe haven during times of economic uncertainty.
Non-Commercials increased their net short positions in the Swiss Franc last week selling a further 6k contracts to take the total position to -38k contracts. The SNB recently reaffirmed its commitment to maintaining accommodative monetary policy which has kept pressure on CHF despite the deterioration in global risk sentiment which usually keeps the safe haven Franc supported.
Non-Commercials reduced their net short positions in the Australian Dollar last week buying 2k contracts to take the total position to -41k contracts. Last week’s light buying follows a week of massive short sales in the Aussie as the market reacts to the intensifying trade dispute between the US and China, Australia’s largest trading partner. While the RBA recently confirmed that policymakers now agree the next move in rates will be up, there is still no idea about timing as the bank acknowledges that obstacles remain in the economy mainly linked to weak household income and low wage growth, so until there is any positive development there, rates are likely to remain at current levels for some time to come.
Non-Commercials increased their net short positions in the Canadian Dollar last week selling 19k contracts to take the total position to -33k contracts. Sentiment has turned sharply bearish on CAD as the trade relationship between the US and Canada has broken down following Trump’s tariffs. As uncertainty around trade grows, the BOC is not expected to raise rates further which has seen the market loading up on CAD short positions as a consequence. Despite the trade situation, Oil prices are rising sharply which is a positive sign for the Canadian economy meaning that further rate hikes shouldn’t necessarily be ruled out.