CFTC: USD positioning moved deeper into net long territory - Rabobank

Analysts at Rabobank offered the IMM Net Speculators’ Positioning as at July 3rd, 2018.

Key Quotes:

"Speculators’ USD positioning moved deeper into net long territory despite USD coming under pressure that has largely persisted since these data were collected. The rebound in USD seen at the start of this week, however, may mean that positioning stays long when the next set of data are released on Friday. Trade wars reign supreme in USD price action at the moment as bouts of risk aversion punctuate market mentality."

"EUR net longs finally increased following 10 weekly declines. This comes as EUR continued to march higher off the June 28th low of 1.1527. The low of the year remains the 1.1509 print observed a week earlier on June 21st."

"GBP moved deeper into net short territory. GBP longs actually rose on the week but the increase in short positions more than offset this driving net short positioning in GBP to the most stretched level seen since September 2017. Since these data were observed we have seen an exodus of ministers with Brexit Minister, David Davis, his Deputy, and Foreign Secretary, Boris Johnson, all resigning in protest at PM May’s latest Brexit vision. With the government in relative disarray we could see short term pressure on Cable."

"JPY short positions increased for the fourth consecutive week while longs also increased but not enough to offset the shift in short positioning. As such, net shorts moved deeper into net short territory. USD/JPY continues to be predominantly driven by rate differentials and risk appetite."

"AUD net short positioning continues to decline as AUD/USD rallied off the 18mth low observed at the start of July. The 50dma at the 0.75 handle is now in site but global trade tensions and steady monetary policy make it hard to become too bullish of AUD."

"CAD net shorts continue to increase sharply as short positions increase but more importantly long positions nearly halved. The Bank of Canada will meet tomorrow (after the next set of CFTC data are collected today) and although we expect a 25bp hike to 1.50% this is likely to be a ‘dovish’ hike with the Bank particularly cautious about the potential impact of an escalating trade war. We expect the 1.32-1.34 range to dominate for the rest of the year."

"MXN net positioning returned to long territory as the Presidential election came and went and the carry trade players move back into long MXN positions."