This was a week of subtle but important change as the marketpared its long exposure to Europe driving the net USD position toflat. In addition, most trends are decreasing, providingfurther evidence that market themes are shifting. However with anarrowing in the CHF net long and an increase in the AUD andMXN net longs and a relatively flat short JPY position there was noclear signal that risk aversion was the over arching theme.
The net EUR position flipped to a net short for the first time since February 2014, highlighting a sudden fear that the bullish EUR run is ending. In 2014, EUR has shifted to a net short position on two occasions but has never sustained this position beyond two weeks.
CAD is held net short $2.4bn, a short position that has been narrowing since mid‐March. However, the market continues to favour the short side of CAD, holding the gross long relatively constant all year.
GBP is the largest net long at $3.3bn but conviction has faded as the position narrowed by $1bn this week. There was a similar scaling back of position for CHF, with the net long cut in half.
JPY is the largest net short at ‐$7.9bn; this week the position widened slightly but remains within its recent range.
Read the full report: FX Research
Scotiabank