• This week there was a surge in bearish EUR sentiment while most other position changes paled in comparison. The net long USD position has widened to $11bn; however it is not a broad USD shift as the market sits with long GBP, AUD, NZD and MXN positions but short CAD, EUR and JPY positions.
• CAD sentiment is stubbornly bearish with an unwavering net short position of $2bn. The divergence with the building net long AUD position is striking and is unlikely to hold in the long-term.
• Bearish sentiment toward EUR has accelerated, with a $10bn net short position reaching levels last seen in June 2013. The EUR position is now nearly matched with the net short JPY, following five consecutive weeks of deterioration. Most of the recent shift has occurred on the back of declining longs, as shorts remain relatively reluctant to commit.
• JPY sentiment has deteriorated for the third consecutive week, raising the risk of a reversal amid rising geopolitical tensions. The net short position stands at $10.0bn, at the upper end of its 52 week range.
Read the full report: FX Research
Scotiabank