USD longs steady, EUR shorts continue to consolidate - Rabobank

Jane Foley, Senior FX Strategist at Rabobank, lists down the IMM net speculators’ positioning as at 29 November 2016.

Key Quotes

• “Net USD longs held steady last week just below the level that existed ahead of the US Presidential election. According to the futures market, a Fed rate hike in December should be fully priced in.
• Bearish bets against the pound extended last week but they remain below recent highs. GBP has adopted a fairly binary set of reactions to UK political news dependent on whether it is deemed to support a ‘hard’ or ‘soft’ Brexit.  The UK’s Supreme Court will this week debate the appeal of the High Court ruling on whether parliament or the PM has the power to trigger Article 50 and start the Brexit process.
• EUR shorts continue to consolidate at levels just below their recent highs. An extension of QE is widely expected to be announced by the ECB at this week’s policy meeting. However, the ‘no’ outcome of the Italian referendum on structural reform has added uncertainty to the EUR’s outlook.
• Net yen positions turned negative for the first time since December 2015 continuing the turnaround in sentiment obvious since the US election. The recovery in the USD is the primary factor behind this move.
• Net CHF shorts reached their highest levels since 2015on the back of the stronger USD.
• CAD net shorts dropped a little ground. A run of poor trade data and concerns about NAFTA are in view. The level of AUD longs dropped back heavily for a second consecutive week. This week’s release of Australian Q3 GDP data is expected to be soft.”