USD longs dropped, JPY shorts increased - Rabobank

The analysis team at Rabobank points out that according to IMM Net Speculators’ Positioning data as at 9 May, 2017, USD longs dropped last week to their lowest levels since last Oct – ahead of the Trump win in the Presidential election and the fall in long positions is despite strong expectations for a June rate hike from the Federal Reserve.

Key Quotes

“Speculative EUR positions surged into positive territory for the first time since May 2014 on the back of the news that Le Pen had been defeated in the second round of the French Presidential election. Better economic data and the debate about the possibility of a potential change to the ECB’s forward guidance have also contributed to the EUR’s better tone.”

“JPY shorts increased for a second consecutive week last week as geopolitical news stayed mostly off the front pages. That said, JPY shorts are still less than half of the levels reached in March and further testing of nuclear missiles by N. Korea could offer support going forward.”

“Bearish bets against the pound almost halved last week on the back of expectations that PM May will be able to win a strong majority in the June 8 general election and ahead of the May 11 BoE policy meeting. There had been some speculation of a more hawkish tone from the MPC. Also, a lot of bad news regarding the Brexit process has been priced into GBP. That said, the pound could be vulnerable again once negotiations regarding trade between the UK and the EU27 are underway.”

“CHF shorts edged lower last week despite the Macron victory in the French Presidential election and the words of the SNB’s Jordon regarding the central bank’s fight against the strong CHF.”

“CAD shorts surged last week, extending for a tenth week the drop in confidence in the unit. That said, the recovery in the price of oil should bring some support in the next set of data. Similarly AUD long positions dropped last week.  The better tone in iron ore prices should lend support this week.”