USD longs edged lower, EUR shorts dropped - Rabobank

Research Team at Rabobank lists down the IMM net speculators’ positioning as at 10 January, 2017.

Key Quotes

“The bearish EUR sentiment that surged in early November has continued to unwind and is now at the lowest level since June. EUR shorts had already dropped sharply following the December ECB policy meeting and continued to move lower into the end of last year. At the start of 2017 stronger than expected German and Eurozone inflation data re-opened the debate about the appropriateness of easy ECB policy settings.”

“Yen bears have also lost their nerve with short positions dropping markedly last week. The levels of yen shorts had already fallen back modestly the previous week signalling that the momentum behind the carry trade has stalled.”

“Net USD longs edged lower but the tone is essentially consolidative. With a lot of good news already priced-in to the USD, investors are awaiting fresh direction.”

“Having declined since the start of December, bearish bets against the pound have pushed higher for the past two weeks. Even though recent UK data releases have been constructive, focus remains drawn to Brexit related political news and fears of a ‘hard’ Brexit.”

“Having briefly jumped into positive territory in late December, CHF positions fell back into negative ground before the end of the year and have since continued to extend. Positions remain influenced by expectations regarding the outlook for the USD and safe haven demand.”

“Following the sharp fall in CAD net shorts at the end of December, speculators have further increased them during the past two weeks. Oil prices are in focus, though this week’s BoC meeting and Trump inauguration should draw attention back to the economy. AUD speculators’ positions dropped into negative territory at the end of last year for the first time since June 2016. Shorts grew modestly last week.”