USD longs dropped, EUR longs have recovered - Rabobank

According to IMM net speculators’ positioning as at July 3, 2017, USD longs dropped sharply to their lowest level since February 2014 as the latest set of data showed additional slippage, points out the research team at Rabobank. 

Key quotes

“This reflects a lack of conviction in the Fed’s hawkish forward guidance and concern about the subdued level of US inflation data. However, it also suggests that the USD may now be better placed to take bad news in its stride.”

“GBP shorts increased again, though they remained within recent ranges. Although the UK government lost its majority after the election, GBP appears to have drawn some support from speculation that this means that Brexit may be less ‘hard’.”

“Having dropped heavily the previous week EUR longs have recovered some ground, though they remain below recent highs. Better Eurozone economic data and Macron’s success in the French parliamentary election has strengthened the tone of the EUR since the spring.”

“JPY shorts increased to their highest level since March. The BoJ has maintained very dovish rhetoric in contrast to other central banks. However, changing demand for safe haven remains a primary influence for the JPY. Geopolitical uncertainty in the Gulf region, political uncertainty in the US or further testing of nuclear missiles by N. Korea could offer support to the JPY going forward.”

“CHF shorts increased modestly having dropped heavily to their lowest level since December the previous week. The improvement in the Eurozone economy should over time reduce safe haven demand for the CHF.”

“CAD shorts dropped heavily after the rhetoric from two BoC officials appeared to be less dovish. The outlook for price of oil remains a key influence. AUD long positions increased having moved decisively into positive territory the previous week as iron ore prices pushed higher.”