US Dollar (USD) net short positions have increased for the second week in a row, driven by a decrease in long positions. Euro (EUR) net long positions have decreased for the third week in a row, driven by an increase in short positions. Pound Sterling (GBP) net short positions have increased, driven by a decrease in long positions, and Japanese Yen (JPY) net long positions have decreased for the second week in a row, driven by an increase in short positions, Rabobank’s FX analyst Jane Foley and Molly Schwartz report.
USD shorts increase
“On Friday, August 1, we saw disappointing nonfarm payrolls at 73k, and a two month revision of -258k. The market is positioned for around 2.3 rate cuts by year-end. USD has been the worst performing G10 currency month-to-date and year-to-date. Speculators are long 11,399 positions, which is the lowest amount since June 2020.”
“Eurozone unemployment ticked lower from 6.3% to 6.2% on July 30, while July CPI inflation maintained pace at 2.0%. On August 7 the BoE released its decision to cut the bank rate 25bp to 4.00%. The market is pricing in 20bp worth of cuts by year-end.”
“The Bank of Japan released its decision to maintain the target rate at 0.5% on July 30. JPY has been the best performing G10 currency month-to-date. The OIS curve suggests investors are positioned for around 15bp worth of hikes by year-end.”