USD longs edged down, EUR shorts bounced higher - Rabobank

Jane Foley, Senior FX Strategist at Rabobank, lists down the IMM net speculators’ positioning as at 04 October 2016.

Key Quotes

• “Bearish bets against the pound rose again last week to reach multi-year highs on the back of a surge in fears about a hard Brexit.

• EUR shorts bounced higher last week. Net positioning has lacked direction in recent weeks and could remain skittish. Fears triggered by last month’s indication from ECB President Draghi that the Governing Council had not discussed an extension of QE at the September policy meeting were buoyed by a newswire report last week about a potential tapering of QE by the ECB. That said, no time-frame was mentioned in this story.

• USD longs edged down even further last week to their lowest level since May. The market remains skeptical about the prospect of a rate hike from the FOMC this year and anticipates only a slow pace of tightening in 2017.

• Having moved back to their highest level since April the previous week, net JPY longs effectively consolidated their position. A dovish Federal Reserve and safe haven inflow are both supportive for the yen.

• Having turned negative for the first time since March the previous week, CAD shorts increased. Oil prices remain a prime focus but the US election is gaining more attention. The level of AUD longs continued to grow. New RBA Governor Lowe is expected to keep policy steady in the coming months.”