• Sentiment continues to favor the USD, as nearly all of the majors are held net short vs the USD. However, the w/w changes suggest moderation as all but one of the currencies held net short saw their positions narrow. The aggregate net long USD position remains relatively elevated at $23.5bn.
• CAD -$1.1bn: The $0.5bn narrowing in the net short position has been driven primarily by short covering, though long positions also saw a moderate decline. Overall, both sides of the CAD position have been pared back for three consecutive weeks, suggesting that investors remain indecisive with regards to the outlook for movement.
• AUD -$6.6bn: Bearish sentiment is near record levels, as investors remain reluctant to build long positions ahead of the RBA, given expectations for easing. The continued decline in AUD also leaves bearish investors comfortable with the record size of their position.
• Net EUR -$1.4bn: Positioning changes in EUR ahead of both Fed and ECB policy announcements (Tuesday is the position date) suggests that investors were biased toward EUR strength, given the relatively large $3.2bn narrowing in the net short position. The bulk of the narrowing was driven by a build in longs, as shorts were pared back modestly.
Read the full report: Market Research
Scotiabank