USD net shorts edged a little lower, EUR longs pared - Rabobank

According to IMM net speculators’ positioning as at February 06, 2018, net short USD positions edged a little lower last week in response to the plunges in stock markets and heightened fears of inflation in the US, notes the research team at Rabobank. 

Key Quotes

“Concerns regarding a tightening of USD liquidity could trigger increased demand for dollars.”

“EUR longs were pared last week though they remain at elevated levels. ECB President Draghi made some attempt to push back against EUR strength at the January policy meeting, though this was judged to be half-hearted.”

“Net GBP longs dropped back for a second consecutive week but remain at firm levels. Rate hike speculation was boosted at the end of last week by the BoE. While this is supportive for GBP, political uncertainty related to the Brexit transition period could keep a lid on the pound as could confusion caused by the deep divide within PM May’s government.”

“Net JPY shorts fell back for a second consecutive week. Interest rate differentials are negative for the JPY given the BoJ commitment to its QQE programme. However, demand for safe havens, in light of the souring of risk appetite, is yen supportive.”

“CHF net shorts held mostly steady last week, slipping very slightly. Net positions have been in negative territory for twenty-seven consecutive weeks. Although a drop in risk appetite is CHF supportive, fear of SNB intervention could prevent a strong surge in demand for the CHF.”

“CAD longs pushed higher. Oil prices and Nafta talks remain in view.   AUD positions edged slightly higher. Overall sentiment remains jittery.”