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Screenshot of a breaking news alert e-mail from Q2 2017
In the latest CFTC Commitment of Traders report Scotiabank lines up the most pertinent details from the latest week. USD bulls are gaining momentum with the net position increasing to $38bn. Traders have been long USD since June; however the position was not broad, held almost exclusively in EUR and JPY. This week there was a change with the net position shifting to long USD against CAD, AUD and MXN; leaving only GBP held as net long. This broadening of momentum warns that the USD rally is strong and leaving the near-term risk favoring USD upside.
• CAD and AUD generated sell signals as the net positions shifted from long to short; with the net CAD short now at -$0.4bn and the net AUD short at -$0.2bn. This building out of position warns of ongoing downside pressure on spot.
• EUR positioning is bearish with the largest net short at $21.7bn. We note that sentiment has failed to deteriorate over the past month despite the continued decline in spot, warning that traders will need a catalyst to add to short positions. Meanwhile, GBP sen-timent appears to be stabilizing with a net position that has shown little movement in recent weeks as investors have shifted their focus back to fundamentals.
• JPY has the second largest short position at $13.8bn, and details suggest a renewed desire to short JPY given that bears have built their positions through 8 of the last 10 weeks.
To see the full COT report, click here.