USD longs added, GBP shorts extend in the run-up to the BoE meeting – Deutsche Bank

Research Team at Deutsche Bank, notes that investors marginally added to their long dollar exposure in the past week, taking implied USD longs as a fraction of open interest to 16.2% from 16.0%.

Key Quotes

“EUR witnessed modest short covering, while bearish sentiment in GBP extended marginally in the week of the BoE meeting. At the same time, investors expressed contrasting behavior with the safe haven currencies. There were more bullish on JPY, after trimming net longs for three consecutive weeks previously. Meanwhile, positioning in CHF flipped to net shorts. In the dollar bloc, investors trimmed their CAD longs, whereas positioning in the antipodes remained unchanged. Elsewhere, bearish sentiment in MXN extended further over the week.

Traders in Financial Futures data show that leveraged funds have increased their implied dollar longs considerably, whereas asset managers flipped their positioning to implied dollar shorts. EUR sentiment improved over the past week with leveraged funds trimming their net shorts and asset managers extending their net longs. Both the communities extended their bearish sentiment in GBP.

Among the risk-off currencies, leveraged funds reduced their net longs in JPY, while adding net shorts in CHF. By contrast, asset managers reduced their bearish exposure in both the currencies, flipping CHF positioning to net longs from net shorts. Sentiment in CAD deteriorated as both the communities reduced their bullish bets moderately.

In the Antipodeans, leveraged funds were more bearish in both AUD and NZD. By contrast, asset managers added net longs in AUD and pared net shorts in NZD. In MXN, leveraged funds extended their net shorts modestly, while asset managers added a decent amount of net longs.”