According to IMM net speculators’ positioning as at July 31th, 2018, USD speculators’ positions continued their ascent for the thirteenth consecutive week as strong US Q2 GDP data provided fresh incentive, notes the research team at Rabobank.
Key Quotes
“Broad-based support for the USD reflects heightened capital outflows from emerging markets and an indication from the FOMC that rates could be increased by a total of 4 times this year.”
“EUR longs retreated following the reiteration of the guidance from the ECB that rates may not be raised until at least summer 2019. EUR longs are currently only about one fifth of their size in early May.”
“GBP shorts continued to push further into negative territory despite the market’s expectation of an August BoE rate hike. Despite confirmation of the rate hike and the decent tone of UK economic data, political uncertainty has become the overwhelming focus in the spot market.”
“Net JPY short positions retreated moderately last week in spite of the dovish guidance from the BoJ’s policy meeting. However, this could be a normalisation following the previous week’s jump. Fear of trade wars does not appear to be triggering demand for the JPY.”
“CHF net shorts dropped back last week, but remained essentially consolidative. The SNB remains committed to ultra-accommodative policy and this is likely diverting safe haven flow related to the recent sell off in EM currencies into the USD.”
“CAD shorts dropped lower. Optimism about NAFTA is supportive but commodity prices remain in view.”
“AUD shorts have increased to their largest levels since Nov 2015. Increasing US/China trade tensions have weighed on confidence. The RBA remains cautious on it policy outlook.”
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