USD shorts lowered, GBP longs doubled - ANZ

According to the CFTC positioning data for the week ending 3 October 2017, leveraged funds turned net USD buyers after three consecutive weeks of selling, notes the analysis team at ANZ.

Key Quotes

“Overall net short USD positions were lowered by USD1.1bn to USD10.4bn. Market pricing for a December Fed rate hike has now risen to 75% as the wage component of the September nonfarm payrolls data beat expectations. Upcoming September CPI print will be key for fund positioning in the near term.”

“Most of the dollar buying was against the yen and euro. JPY selling totalled USD1.7bn, which resulted in overall net short JPY positions increasing to USD7.6bn, the largest in eight weeks. EUR selling amounted to USD0.7bn, leading to a drop in overall net long EUR positions to USD2.2bn. Net CHF longs were also lowered for the first time in five weeks.”

“Despite GBP weakness during the week, leveraged funds more than doubled their overall net long GBP positions, taking it to USD2.2bn. While funds may have been looking for a BoE rate hike to support the GBP, political uncertainty in Britain has sent the pound lower, which may see the net buying of the past four weeks come to a halt.”

“Funds remained bullish on commodity currencies for the second straight week. This was primarily led by CAD where funds added USD0.3bn to take their net long CAD position to USD5.4bn, the third consecutive week of net buying. Net long AUD positions were increased marginally, and NZD positions were reduces slightly.”

“Funds’ demand for EM currencies was sustained for a second consecutive week. All three currencies (MXN, BRL and RUB) saw combined net buying of USD0.3bn in the week. At USD0.2bn, weekly net BRL buying was the highest since April 2016 as economic indicators point to a recovery.”

“Net long gold and crude oil contracts were trimmed on weak commodity prices globally. Net longs in 10-year USTs fell for the second consecutive week as yields kept inching up on stronger US economic data.”