EURUSD

Non-Commercials increased their net short positions in the Euro last week selling a further 0.6k contracts to take the total position to -66.5k contracts. Positioning adjustment were clearly quite muted last week ahead of the ECB’s January meeting. With recent economic data continuing to highlight positive momentum in the EuroZone, most investors were expecting the bank to deliver a rather neutral message, while some analysts highlighted Hawkish, upside risks. Despite the firmer data, however, the ECB chief noted that “The Governing Council will continue to look through changes in HICP inflation if judged to be transient and to have no implication for the medium-term outlook for price stability.”

Inflation in the EuroZone has jumped from 0.6% to 1.1% over the last year leading to calls from German officials for the ECB to consider lifting rates which currently sit in negative territory. Draghi noted, however, that annual inflation rates do not yet show a clear trend to the extent that would merit the ECB changing its policy. In all, the ECB maintained their current monetary policy level. This week traders will be mainly watching PMI data sets due to be released on Tuesday.

GBPUSD

Non-Commercials increased their net short positions in Sterling last week selling a further 0.4k contracts to take the total position to -66k contracts. Despite the relatively small week-on-week adjustments, selling pressure has remained fairly consistent over recent weeks as investors continue to express their uncertainty regarding the upcoming Brexit negotiations.  The UK PM’s speech last week clarified that the UK will look to leave the Single Market in exchange for gaining sole control over immigration and regulatory affairs.  However, instead of falling in response to the speech, GBP actually rebounded to trade higher, catching many traders off guard.

One of the reasons for this simply comes down to a “sell the rumor, buy the news approach” as the contents of the speech had been broadly revealed over the prior weekend leading to heavy selling in the run-up to the speech. Furthermore, the speech didn’t contain any curveballs or surprises and so didn’t provide any catalysts for fresh downside.  In all, it seems that the market responded positively to clear details regarding the PM’s plan and her reassurances that the economy is in a strong position.  This week traders will be mainly focused on Q4 GDP due to be released on Thursday as well as the UK Supreme Court ruling on Tuesday as to Parliament’s role in Brexit.

USDJPY

Non-Commercials reduced their net short positions in the Japanese Yen last week buying 2k contracts to take the total position to -78k contracts. This marks the third consecutive week of short covering in the Japanese Yen. Safe-haven demand has started to creep back into the market as Equities stall, Oil has dipped lower and political uncertainty around Donald Trump’s policy approach increases. Flows are expect to continue to revolve around the market looking to gauge how the new US administration’s policies are likely to affect Asia with any risk off tone providing support for JPY. On the data front, domestic CPI due on Thursday will be the key focus for the week.

USDCHF

Non-Commercials reduced their net short positions in the Swiss Franc last week buying 0.5k contracts to take the total position to -13.7 contracts. Positioning adjustments in the Swiss Franc have been fairly muted over the last few weeks as traders awaited the US President’s inauguration and now also await first signs of policy approach. The mild risk off tone over recent trading has provided support for the Swiss Franc which tends to appreciate over these periods due to its safe-haven status, similar to the Japanese Yen.

AUDUSD

Non-Commercial positioning in the Australian Dollar has flipped net-long again for the first time in 2017 following buying of 9k contracts last week to take the total position to 5k contracts. Short positions have been steadily covered over recent weeks as RBA easing expectations have dissipated, alongside a stream of positive data out of China which has buoyed the Aussie.  US Dollar weakness over recent weeks has also provided a steady boost for AUD which is now trading around levels last seen in in mid-October last year. On the data front, the key reading this week will be Q4 CPI which is expected to have increased from the Q3 reading. A positive print here will further compound expectations that the RBA will remain on hold over the coming months, adding further support for AUD.

USDCAD

Non-Commercials reduced their net short positions in the Canadian Dollar last week buying 2.5k contracts to take the total position to -5.5k contracts. At their recent meeting the BOC highlighted the level of global uncertainty currently and the potential risks aligned to President Trump. The meeting was roughly seen as Dovish and following a weaker CPI print at the end of last week, CAD has been under pressure. Oil prices have also softened over recent weeks which has also weighed on price. No key domestic data focus this week so traders will likely be focused on any reports related to President Trump as well as watching Oil flows.