The latest CFTC report showed that FX speculators clearly remain bullish on the US Dollar, despite the recent loss in momentum. Rising rate expectations in the US and an increase in geopolitical risks means that the Greenback remains King...for now.
EUR net positioning stood at 16k short - an increase of 9k compared to last week. Concerns about the political crisis and growing rate divergence between the US and the Euro Zone are keeping the currency under pressure.
Meanwhile, GBP net positioning jumped from 59k short to 61k short. Given the on-going uncertainty around the Brexit negotiations, it is surprising that the British Pound is holding so well. For GBP bulls, the 1.30 level is crucial, as a clear break below that level would pave the way for a retracement towards 1.27.
JPY net positioning remained almost unchanged at 115k short - an increase of 1k compared to the previous week. Rising rate expectations caused speculators to bet against the Japanese Yen. However, the current risk-off sentiment in the market is preventing a larger JPY decline.
Commodity FX positioning:
AUD short 73k vs short 72k previously
CAD short 12k vs short 19k previously
NZD short 34k vs short 31k previously
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Ongoing rate curve repricing and risk asset reaction perfectly illustrate how worryingly reliant investors have become on easy money policies