USD bears slash bets, CAD bulls hold on - Scotiabank

Analysts at Scotiabank explain that after the relatively light touch to position adjustments among IMM participants last week, CFTC data for the week of the 24th of October saw a significant change in overall positioning.

Key Quotes

“The result was a significant reduction in the bear bet on the USD, which fell by a third in aggregate terms this week to a little under USD10bn in total against the major currencies, the smallest bear bet on the big dollar since late July.”

“The largest positioning change on the week was in the JPY contract, where bear bets were lifted by USD1.5bn in the week to reach nearly USD13bn. The JPY’s low-yielding counter-part, the CHF was also out of favour and bearish positioning here increased by a little over USD800mn in the week, the highest since June. Net EUR shorts were cut by just over USD1bn, or 6k contracts, in the week while net long AUD and NZD contracts were also liquidated (implying USD short covering). Net GBP positioning was little changed around neutral levels, meanwhile, as investors await Thursday’s BoE decision.”

“Elsewhere, IMM traders continue to struggle with the volatility in the CAD. Net longs were little changed in the week, seeing only USD290mn worth of long liquidation (3k contract equivalent) despite the slide in the CAD. In truth, the CAD was down only 1% in the reporting week but was clearly little positioning change in response to the weak Canadian retail sales last Friday. Net MXN bull positioning continues to erode amid NAFTA concerns.”