EUR NET LONG RISES; AUD HIT BY SHORT COVERING
• USD net long narrows to $16bn as traders narrow their short AUD position and add to their net long EUR position.
• EUR net long rises to $2.7bn—shorts are nervous and closing out positions while longs are getting bolder, adding to already long exposures. Sentiment against EUR bottomed on May 28 and has been climbing ever since (the currency bottomed on July 9th). The EUR position has been net long on two other occasions this year, (both short lived) the first was in February when EUR rallied to its ytd high of 1.3711; the second was in June, when it rallied to 1.3417. We are medium-term EUR bears, but recognize that while long positions are being built it is too soon to position for downside.
• AUD net short narrows to ‐$5.7bn—like most extended shorts (gold, JPY and EUR a few weeks ago) AUD traders are taking profits, covering their shorts and puting upward pressure on the currency.
• CAD net short narrows to -$0.9bn—as both longs and shorts decreased CAD exposure. There were minimal w/w changes in NZD, MXN, GBP and CHF
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Scotiabank