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The Canadian dollar enjoyed a move to the upside, as oil prices recovered and the US dollar came under pressure. What’s next?

Here is their view, courtesy of eFXnews:

Scotiabank FX Strategy Research comments on the latest IMM report (covering up to Tuesday, June 27 and were released Friday, June 30).

In particular, ScotiaFX notes that net  CAD shorts tumbled  by USD2.5bn this week which is the  largest, 1-week positioning shift in the CAD’s favor since 2014.

“This looks to us to be an overdue reaction to the CAD’s rebound that got underway in early May.  CAD gains have forced gross shorts to throw in the towel  (and enticed some modest increase of gross CAD longs),” ScotiaFX adds.

Elsewhere, ScotiaFX notes that  EUR bulls were active, increasing longs while shorts covered; on the net, EUR longs rose by a little more than USD2bn in the week.

Overall, ScotiaFX notes that in aggregate, the  speculative community has gone all but neutral on the USD,  reflecting the more constructive messaging on rates from central bankers outside of the US.

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