Sterling shorts trimmed, total short USD positions doubled - HSBC

Research Team at HSBC, notes that the total short USD positions doubled to a still-modest USD4.1bn from USD1.8bn in the week ended 26 April, using the cumulative notional USD total of the currency futures contracts that trade on the IMM.

Key Quotes

“The market’s shift further away from the USD has helped to keep strong interest in risk on carry trades, particularly among the high yielding EM currencies. The Fed’s mixed statement mid-week (after these IMM data were compiled) appears to have convinced the market that a June rate hike is unlikely, giving a green light to USD bears. This could see further position shifting away from the USD next week. Sterling shorts are being reduced, but are still weighty, offering the potential for more GBP upside on any ‘Brexit’ hedge unwinds.

Key position changes

• Short EUR trades contracted from USD6.7bn to USD5.6bn, the lowest level since June 2014

• GBP shorts fell to USD4.4bn from USD5.0bn as ‘Brexit’ hedges were reduced

• JPY longs eased to USD7.5bn from USD8.2bn

• AUD longs rose by USD1.2bn to USD4.6bn, the highest since Sept. 2014

• CAD longs increased 65% to USD1.0bn, also the highest since Sept. 2014

• MXN shorts held steady at USD0.6bn

• NZD longs rose to USD0.5bn from USD0.4bn”