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According to IMM net speculators’ positioning as at July 17th, 2018, rising bullish bets on the USD resulted in net positions edging higher to yet another year-to-date high of 18,924 in the week ending July 17.

Key Quotes

“Demand for the dollar continues to be driven by ongoing capital outflows from emerging markets amid the trade war between the US and China. The greenback remains supported by the interest rate differentials.”

“While the Dollar Index fell sharply on Friday, it crucially held around the 50-dma at 94.31. Sustainable trade above this level would indicate that the USD bulls have not been discouraged by remarks from President Trump. At this stage we maintain a constructive view on the USD.”

“EUR net long positions continue to be trimmed and fell to a new year-to-date low. While the Fed intends to raise rates further in the coming months, the market will have to wait until the second half of next year for the ECB to start hiking, which for fast moving FX markets is like an eternity. Such prospects should prevent EUR/USD from regaining an upside traction. Our Senior G10 FX strategist Jane Foley expects EUR/USD at 1.14 by the end of the year.”

“After plunging to yet another low so far this year in first week of trading in July, GBP shorts have been modestly reduced. That said, market sentiment towards GBP remains bearish due to prevailing political risk as reflected in a week of recent political drama.”

“If it wasn’t for Trump’s barbs at the Fed, GBP/USD would have ended last week well below the technical support area around 1.3040/30.”

“Speculators have been caught long USD versus JPY last week when USD/JPY plunged on the back of President Trump’s comments about the Fed and the dollar. This, however, should be seen as short-term setback rather than the beginning of a sustainable reversal as outlined here.”

“Positioning in AUD/USD and USD/CHF remained virtually unchanged.”