USD still the big long – ING

Commenting on the latest Commitments of Traders (COT) report published by the United States (US) Commodity Futures Trading Commission (CFTC), “The aggregate speculative USD positions vs G10 currencies show that demand for the dollar remains stable and in line with its historical average,” noted ING analysts.

Key quotes

“EUR/USD speculative shorts continue gradually increasing. This is in line with our non-optimistic view on the cross as the lack of tangible and credible US-China trade conflict resolution is unlikely to lead to a weaker USD. We expect EUR/USD to settle in the 1.05 -1.10 range for the rest of the year.”

“GBP short positions had been squeezed by around 2% of open interest in the days before 8 October, but the figure does not capture the big spot movements during last Thursday and Friday when sterling rallied close to 4% against the USD.”

“The move in the pair was likely aided by significant position-squaring effect given the extended GBP shorts, at 30% of open interest on 8 October. Expect this number to shrink significantly in the next CFTC report. Given the still large one way GBP positioning, the pound has scope for a further rally should the withdrawal agreement be reached this week, however, we still think the bar for this is quite high.”