Rabobank offered the CFTC Commitment of Traders Report and noted that 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.
Key Quotes:
“Having surged to their highest level since June 2017 the previous week, USD speculators’ positions only edged up modestly last week. 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 dropped for a tenth consecutive time, though last’s week fall was modest in comparison to the previous week which was a reaction to the message from the ECB that rates may not be raised until at least summer 2019. Tensions within the German government are also weighing on sentiment.”
“Having plunged into negative territory in the middle of June, GBP shorts grew further last week. Even though the MPC surprised the market with a hawkish leaning from Chief Economist Haldane, UK political uncertainty is a risk factor for the pound given a lack of direction over Brexit policy.”
“Net JPY short positions eased a little having increased significantly the previous week on the heels of the US/N. Korean summit. Looking ahead, risk appetite could falter more considerably given the apparent escalation of trade wars. This could lend support to the safe haven JPY.”
“CHF net shorts rose for the first time since May after the SNB reaffirmed its commitment to ultra-accommodative policy at its regular meeting. Trade wars and tension in the German government could be supportive in the coming months.
CAD shorts shot higher last week. In the spot market the CAD has performed poorly in response to the worsening stand-off between the US and Canada over trade. AUD shorts edged down having rose sharply the previous week. Weaker than expected labour data and increasing US/China trade tensions have been contributing factors.
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