CFTC Commitment of Traders Report: dollar bulls took a breather - Rabobank

Analysts at Rabobank offered the IMM Net Speculators’ Positioning as at 27 December 2016.

Key Quotes:

"Net JPY shorts have continued to ascend on the back of the carry trade, reaching levels last seen in August 2015. In addition to expectations of higher US interest rates, better PMI data from China have also supported the increase in short yen positions.

Net USD longs have edged down from their recent high suggesting that speculators are taking a breather after the run up since October. The minutes of the December FOMC meeting in addition to the release of the December US labour data will provide the next incentives for investors.

Bearish bets against the pound have dropped noticeably since October. The market appears to be evaluating the risk of a hard Brexit as noticeably lower than in October. Also, GBP has found support from some better than expected UK economic data releases.

EUR shorts dropped sharply following the December ECB policy meeting and continued to move lower in the following weeks. The market sees the December decision by the ECB to taper the amount of monthly asset purchases from March rather than September as being less dovish than expected. Better Eurozone PMI and German CPI data could feed the trend of shrinking EUR shorts going forward.

Having briefly jumped into positive territory in late December, CHF positions fell back into negative ground before the end of the year. They remains heavily influenced by expectations regarding the outlook for the USD and safe haven demand.

CAD net shorts have dropped sharply, with oil prices in focus. Australian positions dropped into negative territory at the end of last year for the first time since June 2016."