This data references the period ending Tuesday, September 13th.
EURUSD
Non-Commercials reduced their net short positions in the Euro last week buying 11k contracts to take the total position to SHORT 81.4k contracts. This reduction in short positioning represents EUR bears covering at their fastest pace since January and reflects a lack of downside catalysts coming on the back of the ECB’s latest meeting which saw the bank remain on hold once more. Traders’ easing expectations whilst had built up over the summer have now started to dwindle as EuroZone data continues to surprise to the upside. Whilst the ECB continue to note their readiness and willingness to act, traders are less convinced that the ECB will ease further in the short term as Draghi noted the bank had not even discussed an extension of QE at their latest meeting.
GBPUSD
Non-Commercials reduced their net short positions in Sterling last week buying 7k contracts to take the total position to SHORT 83k contracts. This reduction marks the third consecutive weekly reduction in shorts, the longest run of position squaring since the Brexit vote. Similar to the Euro, the GBP short covering has been driven by a lack of fresh downside catalysts. At their latest meeting, the Bank of England opted to keep policy on holding noting resilience in the UK economy since Brexit, indicated by strengthening economic indicators. The bank noted that they expected H2 growth to be stronger than initially expected, in line with recent data. However, the bank did note that they remain ready to act in November if the outlook is in line with August forecasts. Again, however, given recent data, traders are unwinding easing expectations.
USDJPY
Non-Commercials increased their net long positions in Japanese Yen last week buying 2.3k contracts to take the total position to LONG 57k contracts. The resumption of buying in the Japanese Yen came amidst a surge in safe-haven demand last week as an uptick in US rate hike expectations and rising global bond yields weighed on asset and commodity prices, weakening risk sentiment. Expectations are once again high ahead of the BOJ meeting this week with Japanese papers reporting last week that the BOJ will move further into negative rates. With the BOJ having reduced the duration of their bond purchases over recent weeks, leading to a steepening in the long-end yield curve, many analysts believe that the BOJ are looking to change their focus away from rates and onto targeting a steeper yield curve.
