The USD ends this week lacking a strong catalyst to rise from the minutes of the July FOMC meeting, and accordingly, FX investors will need to place more emphasis on US data than on specific guidance from FOMC members, says BNP Paribas.
In contrast, BNP argues that the almost complete lack of any positioning with the USD limits the downside on any position adjustment.
“Our BNP Paribas Positioning Analysis indicates a USD reading of 0 (on our scale of -50 to +50). Most investors we speak with are inclined to build USD longs rather than shorts,” BNP notes.
“Given that USD longs have largely been abandoned in the market from a 2014 peak of +25, a significant change in investor attitude would be required to produce a sustained fall in the USD from current levels,” BNP argues.
In that context, BNP pencils in next Tuesday as key for the USD with the release of June retail sales followed by Fed Chair Yellen’s Senate testimony.
