Speculators Continue To Bet On A USD/JPY Rally
Axi | Jul 03, 2017 12:30
Originally published by AxiTrader
Last Friday, the CFTC released their latest positioning data. There have been some notable changes, although please keep in mind that the data has been collected on Tuesday. This was one day before the steep US dollar sell-off started. The upcoming CFTC data will likely reflect that, and show that speculators have cut their US dollar long positions further.
Speculative Euro net positioning stood at 59k long last week, up from 45k previously. Techs have turned positive, and the break above 1.14 likely attracted further buying. While the ECB will not hike rates anytime soon, things are looking much better for the Euro Zone nowadays. The political risks have largely disappeared, and the economic recovery is gaining momentum while the US economy is showing first signs of weakness. While EUR/USD seems a tad overbought in the short-term, speculators seem to be keen to add to their euro long positions on any larger dip.
Meanwhile, speculators increased their net long GBP positioning by only 1k contracts. While GBP/USD broke above 1.30 resistance, political uncertainty is likely to prevent a large rally.
While there has been a lot of US dollar selling in past few trading days, speculators are still happy to bet on a USD/JPY rally. Net yen short positioning jumped from 50k to 61k contracts. USD/JPY failed to rally significantly amid the broad dollar weakness, but it managed to close the week above 112. The reason is clear. While the BoC, ECB and BoE signalled that loose monetary policy might end soon - the BOJ didn't. The yen is therefore likely to remain under pressure in the near-term.
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The number of Canadian dollar shorts decreased by more than 30k contracts. The only surprise is that it didn't happen earlier. USD/CAD has been in a strong downtrend for quite a while, but speculators maintained their Canadian dollar shorts. Perhaps they have been hoping that falling oil prices will eventually bring the Canadian dollar down as well. However, that did not occur, and oil has bounced last week.
The Australian dollar net positioning stood at 20k long last week, an increase of 5k contracts. AUD/USD hasn't really been able to gain decent momentum, and failed to break above 0.77 resistance. However, the tech outlook remains positive and a clear break above 0.77 could attract further Australian dollar buying.
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