• The USD bull trend is supported by a net long USD position of $35bn; however it is not broadly held and instead is concentrated in short EUR and JPY positions ($23bn and 12bn, respectively); with most other positions essentially flat, with traders holding net exposure of under $1bn in GBP, AUD, MXN, CAD and NZD. The most obvious change week-over-week was an overall scaling back of risk as traders covered off some shorts and closed longs.
• The net short EUR position has stabilized at $23bn, surprising considering the collapse in spot. Since August 5th EUR has depreciated 6%, yet the net short position is essentially unchanged since that time.
• Sentiment toward commodity currencies continues to soften (top left chart p2), as overall risk is pared back in CAD and as positioning in AUD shows signs of rising downside concern. Overall, the net positions are neutral with CAD held net long at $0.3bn and AUD held net long at $0.7bn, however we note that positions in both are well off their bullish mid-summer levels with CAD and AUD respectively peaking at $2.1bn and $3.7bn.
• JPY sentiment is deteriorating further, with a net short $12.1bn obscuring a build in gross shorts to levels not seen since mid-January. Conversely, gross longs have been quite volatile over the past two weeks, highlighting some of the dynamics that may have contributed to the swift, recent decline in spot.
Read the full report: FX Research