JPY traders put their shorts on - Scotiabank

CFTC positioning report covering data up to Tuesday December 6 highlighted the fact that speculative investors turned net short (barely) JPY for the first time in 2016 notes Research Team at Scotiabank.

Key Quotes

“This week’s update suggests that futures traders did little else but pile on JPY shorts this week.  In aggregate, broader sentiment is the most bullish USD since the start of the year.  Overall positioning long the USD rose USD3.4bn in the week through Tuesday to reach USD29.7bn, the biggest bull bet on the USD since January.”

“The JPY trade accounted for all of that increase; investors were only small short JPY last week but lifted positioning aggressively through Tuesday to stake out a net short of USD3.7bn—an increase on the week of 34k contracts from basically flat.  The bearish positioning swing over the past three months is the largest in four years and reflects the sharp deterioration in JPY sentiment as US-Japan long-term yield spreads widen to the biggest yield premium for the USD since 2010.”

“EUR sentiment was more or less stable in the week; net EUR shorts remain significant and still represent the biggest single bear bet on the USD and net short exposure was trimmed only modestly running into the ECB meeting.  Net GBP shorts were cut slightly this week and while net shorts were built in the NZD and CHF, the change and net positioning is minor.”  

“CAD sentiment remains largely negative; net exposure was reduced very slightly in the week as both gross shorts and longs pared exposure.”