USD longs increased, EUR net shorts virtually unchanged - Rabobank

Piotr Matys, EM FX Strategist at Rabobank, lists down the IMM net speculators’ positioning as at 22 November 2016.

Key Quotes

“While bullish bets on the US dollar actually fell in the first week after the unexpected victory of Donald Trump in the presidential election, speculators increased their long positions in the week ending November 22. Net USD longs rose sharply to 53,189 contracts from 48,428 amid rapidly growing market speculation that fiscal stimulus will revive sluggish economic activity in the US. Last week the DXY Index set at a new year-to-date high at 102.05 as demand for the US dollar prevailed.”

“After falling for a second consecutive week, EUR net shorts remained virtually unchanged. That said, the market seems to have adopted a more bearish view on the euro due to growing political risk in the Eurozone with a focus on the crucial constitutional referendum in Italy scheduled on December 4.”

“With the risk that the UK could be heading for a “hard Brexit” easing (following the ruling of High Court at the beginning of November), speculators further trimmed their bearish bets against the pound. It is worth pointing out that the pound outperformed its G10 peers so far this month.”

“Net yen longs plunged further as USD/JPY surged to the highest level since March. The Japanese yen weakened the most amongst G10 peers since the US presidential election.”

“The CAD proved relatively resilient to Trump’s victory. Both long and short positions remain below the pre-US presidential election levels, which may reflect market indecision. While a rebound in commodities allowed the AUD to trim some of its initial losses, prevailing concerns about US protectionist policies and their negative impact on global trade and ultimately on commodities are likely to fuel AUD volatility in the coming weeks and months.”