GBP long positions eased, short USD positions edged higher - Rabobank

According to the IMM net speculators’ positioning as at October 10, 2017, net GBP long positions eased last week in response to political tensions within the UK’s ruling Tory party. 

Key Quotes

“PM May appears to have held onto her job – at least for now. This likely limited the impact on positioning. News that Brexit talks have reached an impasse could weigh on long positions going forward.”

“Speculators’ net short USD positions edged a little higher but remain essentially consolidative. In late September they had increased to their highest level since April 2014 despite the hawkish signals from the Fed. Concerns that a December Fed rate hike will weigh on inflation expectations further out is weighing on yields and has implications for USD potential.”

“On the back of good growth expectations, EUR longs crept higher for a third consecutive week. This is despite concerns regarding divisions in the Eurozone that followed the Catalan referendum and the reduction of Merkel’s standing at the German election. EUR longs have now surpassed their early September high.”

“Net JPY short positions climbed for a third consecutive week suggesting that the market’s desire to hold JPY for safe haven reasons is dwindling. Strong levels of world growth are attracting funds into higher yielding destinations. That said, shorts are still well below the recent highs seen in July.”

“CHF positions remained in negative territory for a tenth consecutive week. The increase in short positions last week appears consistent with the increase in EUR longs and a general preference for higher yield.”

“CAD longs ticked higher again reaching their best levels since October 2012 following a good set of September jobs data. AUD longs dropped back for a second consecutive week consistent with the lack of hawkish rhetoric from the RBA. Chinese economic data and prices of iron ore and coal also remain in focus.”