The net long USD position — at $13.7bn — narrowed for thefourth consecutive week but most positions remain relatively neutral,close to the median of the last 52-weeks. The one exception is GBP; where positioningis bullish and building. On net, investors are bearish JPY, CADand AUD; bullish NZD, EUR and GBP and neutral CHF and MXN (seetable below).
Investors added to long EUR positions (likely on the back of EMrisk) but immaterially so when judged by the flip-flop in sentimentover the last two months
While investors may appear to be moderating their bearish sentimenttoward commodity currencies CAD & AUD, the underlyingdetails highlight the importance of domestic stories. For CAD, investorsappear to be paring back risk as they re-assess the nearterm outlook, while for AUD a four-week trend of short coveringcontinues to be the primary driver of waning bearish sentiment.
For CHF, the neutral position masks underlying risk being takenand highlights the impact of the opposing drivers of an improvedEuropean outlook that is occurring in tandem with a rise in EMconcerns.
Read the full report: FX Research
Scotiabank