* There are three key takeaways from this report:1) Traders were nervous and scaled back risk as most currencies saw a reduction in gross short and long positions in the face of Syria and the looming FOMC meeting. 2) With the exception of JPY, any trend that had been in place, whether bullish or bearish, moderated this week . 3) The market is positioned for a broad USD rally as most currencies (except EUR) are held net short.
* The CAD net short narrowed $0.3bn to $3.0bn: Investors pared back risk, with both long and short positions narrowing ahead of the FOMC and BoC Gov. speech on Wednesday. For AUD, sentiment has improved moderately, with a $0.9bn narrowing in the net short position to $5.6bn. The shift in AUD sentiment has occurred primarily as a result of short covering, despite a continued decline in the gross long position, which has fallen to a nearly fiveyear low.
* The EUR net long position has fallen by $1.6bn to $2.1bn: Reduced risk appetite leaves the net position broadly neutral. The net short GBP has narrowed by $0.4bn to $3.8bn: A modest narrowing, driven by rising longs as shorts were left unchanged. The gross long position has risen in a nearly unbroken manner since its 18-month low in late July.
Read the full report: Market Research
Scotiabank