EUR shorts dropped, USD longs fell - Rabobank

Research Team at Rabobank lists down the IMM net speculators’ positioning as at 17 January, 2017.

Key Quotes

“The unwinding of bearish sentiment in the EUR stalled last week ahead of the ECB’s Council meeting. That said, short positions are still less than half the size reached at the start of November last year. EUR shorts had dropped sharply following the December ECB policy meeting. 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.”

“Net USD longs fell to their lowest level since mid-November indicating that the reflation enthusiasm which followed the US election have been reversed. That said, USD longs remain well above the levels held last summer suggesting that there is still a lot of good news priced-in.”

“Yen bears continued to retreat last week with shorts falling further. That said, shorts have only back-tracked to levels held at the end of last month. The strengthening of the yen on the spot market suggests that shorts are on track to fall further in the next set of data.”

“Bearish bets against the pound have pushed higher for the past three weeks. The spot market regained some of its composure on the back of PM May’s speech on January 17 suggesting shorts could lose some support this week. Focus remains drawn to Brexit related political news suggesting a volatile outlook ahead.”

“Having briefly jumped into positive territory in late December, CHF positions fell back into negative ground before the end of the year and continued to extend for 3 weeks before losing a little ground last week. Safe haven demand may generate some demand for the CHF.”

“Having increased for three consecutive weeks, CAD shorts have lost some ground. The new US administration should keep focus on risks to the economy and trade with the US. AUD speculators’ positions bounced back in positive territory as the spot market rallied in part on the back of commodity prices.”