ING analysts suggest that the encouraging news flow on the US-China trade relations front has not yet left its mark on AUD and NZD positioning, with the two currencies still the biggest speculative shorts in the G10 space.
Key Quotes
“The kiwi dollar even saw a marginal increase in net shorts, that now pile up to -56% of open interest.”
“The NZD outperformance in the past few days, mostly triggered by a significant re-pricing in Reserve Bank of New Zealand rate expectations (OIS implied probability of a November cut is now only 50%, from 100% two weeks ago), has likely been aided by some position-squaring effect. In turn, we would expect to start seeing some correction in the NZD positioning gauge in the next CFTC report.”
“This week’s Reserve Bank of Australia policy announcement may be pivotal for both antipodean currencies: should it turn out to be a positive catalyst for the currencies, their extensive net short positioning suggests good potential for short-term rallies.”
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