This data references the week ending Tuesday, July 19th

EUR/USD

Non-Commercials increased their Net short positions in the Euro last week selling a further 12k contracts to take the total position to SHORT 100k contracts. Shorts positions continue to build in the Euro as market participants’ expectations of further ECB easing continue to grow. At the ECB’s July rates meeting last week the bank opted to keep policy on hold at current levels citing a lessened impact from Brexit. Growth and inflation were both forecast to be lower in the short term then pick up into 2017/18.

However, the ECB did reiterate that they stood ready to act, with all instruments in their mandate, if warranted. Referring to recent incidents the ECB said that it was very hard to judge how Geopolitical uncertainties would affect the EuroZone but that the coup in Turkey was likely to undermine confidence in the region. Markets this week now await the release of EuroZone CPI and GDP data on Friday with traders looking to the data to provide key insight into how the economy has been impacted by Brexit.

GBP/USD

Non-Commercials increased their Net short positions in Sterling last week selling a further 14k contracts to take the total position to SHORT 74k contracts. The consistent build in GBP short positions over recent weeks reflects heightened uncertainty regarding the UK economy and an intensification of BOE easing expectations. The latest PMI data released last week for the July period showed that the economy contracted at the fastest pace since 2009 with all three readings printing below the 50 mark. This data comes shortly after the BOE notified markets that they were waiting for further data to come in before making a decision on which course of action to take at their August meeting. Attention this week turns to GDP data on Wednesday.

USD/JPY

Non-Commercials reduced their Net long positions in the Japanese Yen last week selling a further 9k contracts to take the total position to LONG 39k contracts. This continued reduction in JPY longs reflects increasing market expectations of further easing ahead of the BOJ’s meeting on Friday. OM Abe ordered a further stimulus package to be devised shortly after his re-election this month and speculation has been rife as to the scale and means of the anticipated stimulus package BOJ Governor Kuroda last week ruled out the prospect of “helicopter money” though traders are expecting that the BOJ will look to utilise unconventional methods to avoid the sort of dismissive market reaction seen in response to the NOJ’s negative rates announcement earlier this year.

USD/CHF

Non-Commercials reduced their Net long positions in the Swiss Franc selling a further 2k contracts to take the total position to LONG 5k contracts. Market participants have been cutting their CHF longs as expectations continue to build regarding the prospect of further SNB action. Markets are now pricing a higher than 80% chance of an SNB cut by September. Following Brexit the SNB confirmed that they had been active in the market and intended to remain so to ensure stability was maintained. SNB’s Jordan recently commented that the SNB must be ready to act in a flexible way to any risks arising from Brexit.

AUD/USD

Non-Commercials increased their Net long positions in the Australian Dollar last week buying a further 17k contracts to take the total position to LONG 33k contracts.  This latest build in AUD longs reflects the continued recovery in risk assets with commodities and equities both benefiting from increased expectations of global central bank easing and also better data out of China. Focus this week will be firmly on the Q2 Australian Inflation reading with traders using the figure as a barometer for the prospect of further RBA action this year with a weak reading increasing the chance of easing at the RBA’s upcoming meeting next week.

USD/CAD

Non-Commercials increased their Net long positions in the Canadian Dollar last week buying a further 5k contracts to take the total position to LONG 22k contracts. The recent build in CAD longs is again a reflection of the strength of the recovery in risk appetite post-Brexit, fuelled by expectations of further central bank easing. The BOC opted to keep rates on hold at its recent July rates meeting with a surprisingly neutral statement which was then followed by last week’s positive June CPI readings which saw inflation beating expectations on both core and headline readings.  Focus this week will be on GDP data due on Friday.