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Francesco Pesole, FX Strategist at ING, points out that CAD’s net positioning has only recently moved at the top of the board in the G10 space (surpassing the dollar), but it is already facing a correction as per the CFTC Commitments of Traders figures for the week 13-19 November.

Key Quotes

“In the week covered by CFTC data, CAD’S net longs retracted by 6.5% of open interest to +17%, with the drop outpacing those in the other commodity currencies (AUD -1.9%,   NZD -2.4%). Such dynamics is strictly related to markets increasingly pricing in Bank of Canada easing.”

“However, it must be noted that the data does not cover the speech by Canadian central bank Governor Poloz on 21 November which prompted a fierce hawkish repricing in the OIS curve (implied probability of a cut in December is down to 8% from 20% last week). In turn, we expect the next CFTC report not to display a further slump in CAD positioning.”