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According to the IMM net speculators’ positioning as at  July 24th, 2018, USD speculators’ positions have continued to rise and have reached their strongest levels since June 2017, notes the research team at Rabobank.  

Key Quotes

“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 managed to bounce higher last week ahead of the ECB policy meeting,  though they remain close to a quarter of their size in May. In the event ECB President Draghi reiterated the guidance that rates may not be raised until at least summer 2019 and the EUR dropped in the spot market.”

GBP shorts continued to push further into negative territory. Last week shorts reached their highest level since September 2017.  Even though better UK economic data have bolstered the market’s confidence of an August 2nd  BoE rate rise, UK political uncertainty remains a significant risk factor for the pound.”

Net JPY short positions jumped again last week having risen sharply in mid-June on the heels of the US/N. Korean summit.  This suggests that geopolitical risk rather than economic risk has been a bigger driver of flows in the safe-haven JPY, since fear of trade wars does not appear to be triggering demand for the JPY.”

CHF net shorts edged higher again last week.  The SNB remains committed to ultra-accommodative policy and this is likely diverting safe haven flow related to the recent sell off in EM currencies into the USD.”

CAD shorts have turned lower. Optimism about NAFTA is supportive but commodity prices remain in view.”

AUD shorts have increased again. Increasing US/China trade tensions have weighed on confidence. The RBA remains cautious on it policy outlook.”