Non-Commercials increased their net long positions in the Euro last week buying a further 8k contracts to take the total position to 30k contracts. This latest adjustment, on the back of weeks of heavy selling, came ahead of the bank’s July monetary policy meeting. Despite the uptick in positioning, bulls were left disappointed as the ECB showed that it was no closer to lifting rates, instead reaffirming its message that it intends to end QE by year end but will keep rates unchanged through summer 2019. Acknowledging recent data weakness as well as uncertainty due to global trade disputes, the ECB struck a cautious tone with a statement unchanged from last time around and a press conference that gave very little in the way of new information.
Non-Commercials increased their net short positions in Sterling last week selling 8k contracts to take the total position to -47k contracts. GBP has been under heavy selling pressure over recent weeks as Brexit uncertainty and political turmoil continue to build. Despite the growing short position, the BOE is widely expected to raise rates this week, moving above 0.5% for the first time in a decade. The change in positioning reflects the shifting market dynamic where the rates story has taken a backseat to the political situation, a theme which should persist as we head closer to Q3.
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Non-Commercials increased their net short positions in the Japanese Yen selling a further 15k contracts to take the total position to -74k contracts. JPY short positions have been rising steadily over recent weeks as the ongoing trade dispute between China and the US has weighed on the Japanese outlook. The key focus for the market this week will be the BOJ July meeting as speculation build regarding a potential shift in policy. Reports earlier in the month noted that the BOJ is considering taking a more flexible approach to its targeting of long term interest rates sparking expectations of an announcement at the upcoming meeting.
Non-Commercials increased their net short positions in the Swiss Franc last week selling a further 4k contracts to take the total position to -45k contracts. The Franc has been under fairly sustained selling pressure recent weeks as the SNB continues to highlight its commitment to maintaining a presence in the market to protect against excessive CHF strengthening.
Non-Commercials increased their net short positions in the Australian Dollar last week selling a further 5k contracts to take the total position to -45k contracts. AUD short positioning has been growing steadily over recent weeks as the trade war between the US and China continues to cloud the Australian outlook. Although the RBA recent noted that all policymakers agree that the next move in rates will be an increase, there is no clearer sign on timing. Bulls were left disappointed last week as the latest inflation data missed, once again highlighting the challenges facing the RBA.
Non-Commercials reduced their net short positions in the Canadian Dollar last week buying 3k contracts to take the total position to -45k contracts. CAD short positions have been partially unwound over recent weeks as the BOC raised rates a further 0.35% alongside signalling further rate hikes to come this year. Despite the hawkish shift in sentiment by the BOC, the market is still cautious given the trade dispute between the US and Canada which continues to weigh on the outlook.