This data references the week ending Tuesday, July 19th
EUR/USD
Non-Commercials increased their Net short positions in the Euro last week selling a further 12k contracts to take the total position to SHORT 100k contracts. Shorts positions continue to build in the Euro as market participants’ expectations of further ECB easing continue to grow. At the ECB’s July rates meeting last week the bank opted to keep policy on hold at current levels citing a lessened impact from Brexit. Growth and inflation were both forecast to be lower in the short term then pick up into 2017/18.
However, the ECB did reiterate that they stood ready to act, with all instruments in their mandate, if warranted. Referring to recent incidents the ECB said that it was very hard to judge how Geopolitical uncertainties would affect the EuroZone but that the coup in Turkey was likely to undermine confidence in the region. Markets this week now await the release of EuroZone CPI and GDP data on Friday with traders looking to the data to provide key insight into how the economy has been impacted by Brexit.
GBP/USD
Non-Commercials increased their Net short positions in Sterling last week selling a further 14k contracts to take the total position to SHORT 74k contracts. The consistent build in GBP short positions over recent weeks reflects heightened uncertainty regarding the UK economy and an intensification of BOE easing expectations. The latest PMI data released last week for the July period showed that the economy contracted at the fastest pace since 2009 with all three readings printing below the 50 mark. This data comes shortly after the BOE notified markets that they were waiting for further data to come in before making a decision on which course of action to take at their August meeting. Attention this week turns to GDP data on Wednesday.
USD/JPY
Non-Commercials reduced their Net long positions in the Japanese Yen last week selling a further 9k contracts to take the total position to LONG 39k contracts. This continued reduction in JPY longs reflects increasing market expectations of further easing ahead of the BOJ’s meeting on Friday. OM Abe ordered a further stimulus package to be devised shortly after his re-election this month and speculation has been rife as to the scale and means of the anticipated stimulus package BOJ Governor Kuroda last week ruled out the prospect of “helicopter money†though traders are expecting that the BOJ will look to utilise unconventional methods to avoid the sort of dismissive market reaction seen in response to the NOJ’s negative rates announcement earlier this year.
