FXStreet (Bali) – Marc Chandler, Global Head of Currency Strategy at BBH, shares his observations based on the speculative positioning in the futures market, noting that no significant (more than 10k contracts) adjustments to gross speculative currency positioning.
Key Quotes
“There were no significant (more than 10k contracts) adjustments to gross speculative currency positioning in the CFTC reporting week ending July 28. The run-up to the FOMC meeting may have deterred activity.”
“A clear pattern was speculators to reduce short euro, yen and sterling positions, and expand the short position in the other currencies. Similarly, speculators cut gross long Australian and Canadian dollar futures.”
“The divergence of monetary policy, which we argue is the key driver, also benefits sterling, where the BOE is also expected to raise rates. The net short sterling position is the smallest since last November. We would not be surprised if it turned positive in the coming weeks. The net position in the Swiss franc is moving in the opposite direction. Speculators have been net long francs since mid-March. It is on the verge of turning short.”
“The net short Canadian dollar position (56.1k contracts) is the largest since March 2014. It is likely to grow further. The net short Mexican peso position continues to grow, setting a new record each time it does.”
“Speculators turned to a net long US 10-year Treasury futures position in the previous reporting week and grew it further over the past week to stand at 65.6k contracts. The bulls added 31.9k contracts, lifting the gross long position to 491.5k contracts. The bears covered 6.3k short contracts, leaving 425.9k.”
“Bulls and bears added to gross positioning the light sweet crude oil futures. The gross longs rose by 11.6k contracts to 476k. The gross shorts increased 21.9k contracts to 232.6. This resulted in a 10.3k contract reduction in the net long position, leaving 243.4k contracts.”
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