FX & Money Markets Daily: CFTC - Speculators Long The USD

Daily Forex Fundamentals | Written by Jyske Bank | Aug 04 08 06:13 GMT |

Today's Comment Majors & Scandies Speculators cut their combined net short dollar position against the eight major currencies (EUR, JPY, GBP, CHF, CAD, AUD, NZD, and MXN) from -14.5 billon to -2.3 billion according to the CFTC Commitments of traders data through July 29. If you remove the speculative positions in MXN and NZD, the speculative investors have actually gone long the USD. Most notably, speculators reversed their net short position in USD versus EUR from -0.8 billion to a net long position of +3.2 billion. Speculators also reversed their net short position in JPY versus USD to a net long position. Overall, speculators closed short positions in USD against virtually all the eight major currencies according to CFTC Commitments of traders. The developments are overall in line with the rebound in the dollar we have seen in the FX market. Data releases from the US have generally been better than expected and data releases from the Eurozone worse than expected. We are currently long USD versus AUD and NZD in two tactical positions. We were quite close to our take profit in the NZDUSD position and decided to conduct a trailing stop by moving the stop closer to the current market price. Hence, our new stop loss will be at 74.00. Today offers relatively few data releases with producer prices from the Eurozone and PCE Index from the US as the most important. The Fed is announcing the future fed funds rate at the FOMC meeting tomorrow and the market will most likely await this and the rate announcement from the ECB Thursday. This means that today will most likely be a relatively quiet day. Emerging Markets Friday started out very quiet with only little movement in EM currencies as markets awaited NFP from the US. The number came out better than expected and this provided immediate support for high yielders TRY and ZAR. Political risks in Turkey were reduced significantly last week as the case against the governing AK Party was dismissed, and focus can now return back to inflation, interest rates, and growth. And very appropriately this week starts off with July CPI from Turkey. Last month the number surprised on the downside and came out at 10.6 % y/y but consensus is that the number will increase again in July to 11.7 %. Following the decline in political risks, consequent TRY appreciation, and the new relatively low level of the oil price, markets now seem to be pricing rates on hold for the rest of the year. At the same time markets agree that inflation is yet to peak later this year, but if July inflation surprises on the upside markets could review their call of rates on hold for the rest of the year and further support for the currency will be seen. We still see room for one more hike of 25 bps. Today's key events 11:00 Producer Prices, EUR 14:30 Personal Consumption Expenditure Index, USD 16:00 Consumer Prices, TRY 06:30 Rate Announcement, AUD Jyske Core Positions - Recommendations Jyske Markets - FX Research http://www.jyskebank.dk/finansnyt