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ING analysts suggest that with improving global risk sentiment, markets are not rushing away from G10 safe-havens as demonstrated too by the relatively small decrease (compared to the high-yielders) in JPY and CHF net positioning in CFTC data for the week, 30 October – 05 November.

Key Quotes

“EUR/USD net speculative positions retracted marginally (-0.9% of open interest) into deeper negative territory and now amount to -11% of open interest. Latest dynamics in euro positioning tend to endorse the notion that the EUR is cementing its role as one of the preferred funding currencies, hence moving broadly in line with the other low-yielders JPY and CHF. Accordingly, we expect a continued resilience in risk sentiment as unlikely to aid any short-squeezing effect on EUR/USD.”

“Elsewhere, GBP positioning remained broadly stable around its 5-year average, signalling market’s wait-and-see approach ahead of the UK elections on December 12th. Investors seem to be pricing in a Conservative majority as the base-case scenario, which is widely seen as a market-friendly outcome. Accordingly, should the risk of a hung parliament start to emerge from the polls, another rise in GBP shorts may be on the cards.”