EUR and GBP long positions dropped sharply - Rabobank

According to the IMM Net Speculators’ Positioning as at September 19, 2017, EUR long positions dropped sharply last week as after having recently hit its longest level since May 2011, positions have retreated to their lowest since the end of June.

Key Quotes

“Strike action in France, coalition talks in Germany, separatists in Spain and approaching elections in Italy suggest a period of relative calm in Eurozone politics could be at an end.”

“Speculators’ net USD positions fell even further last week in the approach to the September FOMC meeting. In the event Fed Chair Yellen signalled that another rate hike could be forthcoming this year indicating that some short-covering could be registered in the next set of data. USD net positions have been in negative territory for nine consecutive weeks.”

“Net JPY shorts have declined further and are now back at levels last seen in June. This suggests that investors are still motivated by the safe haven plight triggered by N. Korean related tension. The BoJ policy meeting last week reiterated a dovish stance.”

“GBP shorts dropped sharply following the step-up in hawkish sentiments expressed by the BoE the previous week. Even though the market has re-priced its expectations for the first BoE rate rise of the cycle, political risk still complicates the outlook for GBP.”

“CHF positions remained in negative territory for a seventh consecutive week. The drop in EUR longs may offer some support to the CHF, if it is sustained.”

“CAD longs pushed higher again last week. A pick up in inflationary pressures is being seen as supporting the odds of another BoC rate rise although a moderation in Canadian growth in Q3 is possible. AUD longs recovered some ground though this could prove short-lived given China risks and indications from the RBA that policy is set to remain on hold for now.”