USD longs surged, EUR shorts continued to grow - Rabobank

Jane Foley, Senior FX Strategist at Rabobank, lists down the IMM Net Speculators’ Positioning as at 01 November 2016.

Key Quotes

“The reported level of net US longs rose though it is likely that this snapshot is failing to capture the volatility in the market that was created by US political events. On the spot market the USD has adopted a fairly binary relationship with US election opinion polls given the uncertainty connected with a Trump Presidency. The ending of the FBI probe into Clinton’s use of a private email server when she was Secretary of State is set to support USD longs in the next set of data.

Bearish bets against the pound dropped back for the fourth consecutive week having reached multi-year highs in early October. The outcome of last week’s High Court ruling that specifies that parliament and not the government has the power to trigger Brexit is likely to result in a sharp drop in net shorts in the next set of CFTC data given hopes that this may avoid a ‘hard’ Brexit.

EUR shorts continued to grow last week and have returned to levels last recorded in January. At the October Council meeting, ECB President Draghi commented that QE would not end abruptly and thus signaled that the asset purchases programme could be extended beyond the current March 2017 end date.

Net yen longs edged a touch lower. There were no surprises at last week’s BoJ policy meeting, though safe haven trades have been a driving force behind spot USD/JPY in recent sessions.

CAD net shorts increased. This follows the surprisingly dovish tone of the BoC on October 19. The level of AUD longs grew for a sixth consecutive week following the RBA’s steady policy decision on November 1. RBA Governor Lowe is widely expected to keep policy steady in the coming months even though CPI inflation is below the RBA’s target.”

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