JPY shorts falling, USD positions held in negative territory - Rabobank

According to the IMM net speculators’ positioning as at August 29, 2017, net JPY shorts having been falling for six consecutive weeks, reflecting demand for safe haven assets in light of tensions between the US and N. Korea, notes the analysis team at Rabobank.

Key Quotes

“Net USD positions held in negative territory for a sixth consecutive period, rising to their highest level since April 2014. Weak US inflation data and the pull of low bond yields have been weighing on the USD for a while. Political disharmony in the US is another negative USD factor.”

“GBP shorts have doubled since early August and risen to their highest level since May on concerns about a lack of progress on Brexit talks. Also impacting the pound are concerns regarding a slowdown in UK economic activity. Against a backdrop of strengthening world growth, several UK economic data releases have been sluggish.”

“EUR longs eased back a little last week but remain elevated. Better Eurozone economic data and Macron’s success in the French parliamentary election have triggered a rotation back into the EUR this year. That said, focus is currently firmly on the ECB and any hint that it could delay a decision to taper its QE programme in light of EUR strength.”

“CHF positions consolidated in negative territory for a fourth consecutive week. The improvement in the Eurozone economy and rotation into the EUR should over time reduce safe haven demand for the CHF. However, this outlook is now complicated by tension between the US and N. Korea which could be supportive for the CHF.”

“CAD longs pushed a little higher but remain below recent highs. Stronger economic data and increased talk of another BoC rate hike could provide further support in the next positioning report. AUD longs pushed higher to their strongest level since April 2013. Chinese economic data and iron ore and coal prices remain in focus.”