USD longs edged higher, JPY longs dropped - Rabobank

Jane Foley, Senior FX Strategist at Rabobank, lists down the IMM Net Speculators’ Positioning as at 06 September 2016.

Key Quotes

“For the second consecutive week bearish bets against the pound edged lower encouraged by the better tone of recent UK data releases. That said, the level of outstanding net short positions remains very large by historical standards. Going forward the market is set to remain very sensitive to the tone of UK economic data.

Ahead of the September ECB Council meeting, EUR shorts pushed higher for a second week. The latest reported level of shorts is around double that of late April but the lack of any policy signal from the ECB could see the level of EUR shorts pared back next week.

USD longs edged a little higher. Although the market remains skeptical about the prospect of a rate hike from the FOMC this year, many Fed officials have aired a hawkish tone. US longs are still below the levels recorded in early August.

Counter to the recent uptrend, net JPY longs dropped last week. Hope has re-emerged that BoJ easing may be extended at the September policy meeting but this is mixed with fear that BoJ policy action may be reaching the end of the road

CAD net longs dropped last week as steady policy was confirmed by the BoC. Despite looser fiscal policy, the market had become less certain that BoC rates will remain on hold into 2017. The level of AUD longs also fell. The carry trade has been a strong support for the AUD and the outlook for US treasury yields remain a key focus.”