USD longs continued strong advance, EUR shorts gained ground - Rabobank

Jane Foley, Senior FX Strategist at Rabobank, lists down the IMM Net Speculators’ Positioning as at 18 October 2016.

Key Quotes

“USD longs continued their strong advance last week, recovering to levels not seen since last December. The better tone is being drawn from expectations that the Fed is set to hike rates by year end and by relief drawn from opinion polls pointing towards a Clinton victory in the November Presidential election.

Bearish bets against the pound dipped last week having reached multi-year highs earlier in the month on the back of a surge in fears about a hard Brexit.

EUR shorts continued to gain ground last week ahead of the ECB’s October Council meeting. ECB President Draghi commented that QE would not end abruptly and thus signaled that the asset purchases programme could be extended beyond the current March2017 end date.

Net yen longs eased back for a second consecutive week. Expectation of a Fed rate hike is negative for the yen given it role as a funding currency.

CAD net shorts increased last week and the surprisingly dovish tone of the BoC on October 19 suggest that positions could extend further in the next set of data. The level of AUD longs grew for a fourth consecutive week. New RBA Governor Lowe is expected to keep policy steady in the coming months though his resolve could be tested by the Q3 CPI release.”