EUR longs rebounded, CAD longs dropped again - Rabobank

According to the IMM Net Speculators’ Positioning as at January 2, 2018, EUR longs rebounded to fresh highs last week as sentiment was buoyed by another round of good Eurozone economic data, notes the research team at Rabobank. 

Key Quotes

“Although ECB President Draghi was dovish last month, speculation about central bank policy is likely to remain a key influence on the EUR through 2018.”

“Net USD positions have held in positive territory for the past three weeks having found some incentive on the back of the Republican’s tax reform package. However, the number of net longs has slipped for the past two weeks indicating diminished bullish USD sentiment.”

“Net GBP longs recovered a little ground last week, though they remain below last month’s high. Optimism that a Brexit transition period will be confirmed has helped to support the pound. However, looking ahead EU/UK trade talks are likely to be tough and could expose cracks in PM May’s cabinet.”

“Net JPY shorts increased further last week but remain below their November highs. The BoJ reaffirmed its commitment to QQE in December. This factor, strong growth and a perceived drop in geopolitical risk are all negative for the JPY.”

“CHF positions have been in negative territory for twenty-two consecutive weeks. Although net shorts are below their November highs, they remain at relatively buoyant levels and increased again last week. This is consistent with higher levels of risk appetite and a backdrop of solid growth in the Eurozone.”

“CAD longs dropped again last week having more than halved in the final week of the year, to their lowest levels since July. On the back of a very strong December labour market report, longs could rebound in the next set of data. Oil prices have failed to offer much influence recently.Having dropped into negative ground in mid-December, AUD shorts increased again last week after consolidating in the final week of the year. The AUD has recently fared better on the spot market. Going forward iron prices and RBA policy speculation are in view.”