EUR longs recovered some ground, USD shorts little changed - Rabobank

According to IMM net speculators’ positioning as at February 27, 2018, net short USD positions were very little changed, notes the research team at Rabobank. 

Key Quotes

“In the spot market the tone of the USD has been buffeted by talk of a more hawkish Fed which is dollar supportive and by concerns about trade wars which knocked the USD at the end of last week.”

“In contrast to the recent trend, EUR longs recovered some ground, though they remain below their early February levels. Focus this week will be on the ECB policy meeting. Although no change in stance is expected for some months, the market will be looking for policy clues related to the end of this year and into 2019.”

“Net GBP longs also reversed the recent trend and recovered some ground. The market has become more certain of the prospect of another BoE rate hike in May. That said, uncertainty related to the EU/UK trade talks could still weigh heavily on the pound going forward.”

“Net JPY shorts lost more ground, dropping back to their lowest levels since October. Interest rate differentials should be negative for the JPY given the BoJ’s commitment to its QQE programme. That said, the market is doubting how long the Bank will maintain this position. Demand for safe haven remains a primary source of support for the JPY.”

“CHF net shorts remained little changed. Net positions have been in negative territory for thirty consecutive weeks. Falls in risk appetite tend to be CHF supportive but fear of SNB intervention should prevent strong surges in demand for the CHF going forward.”

“CAD longs dropped back further. Oil prices, trade wars and the BoC policy outlook remain in view.   AUD long positions dropped back. The threat of global trade wars provide a fresh reason for the RBA to retain a cautious policy outlook.”