EURUSD

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Non-Commercials increased their net long positions in the Euro last week buying a further 12k contracts to take the total position to 138k contracts. Following a few weeks of position squaring, investors have started rebuilding their long positions heading into the March ECB meeting this week. The meeting is widely expected to confirm the ECB’s shift towards a hawkish stance as the bank continues dismantling its easing bias. Given the increasingly strong economic backdrop, traders are expecting the ECB to make further steps towards policy normalization. The January meeting minutes showed that some ECB members were already in favor of removing easing though most weren’t yet confident enough.

GBPUSD

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Non-Commercials increased their net long positions in Sterling last week buying a further 5k contracts to take the total position to 13k contracts. Positioning adjustments in GBP have been fairly volatile over recent weeks as traders grapple with the opposing forces of the ongoing Brexit negotiations and hawkish BOE expectations. Given strong UK data and still firm inflation, traders are expecting the BOE to raise rates at the upcoming March meeting given the language used in the last meeting where BOE governor Carney hinted at the likelihood of rate hikes happening “earlier” than currently forecast.

USDJPY

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Non-Commercials reduced their net short positions in the Japanese Yen last week buying 12k contracts to take the total position to -97k contracts. The record JPY short position that built up over last year is now starting to be unwound at a quicker pace as traders anticipate that a shift in BOJ policy is on the horizon especially following recent inflation data which was stronger than expected.  Last week BOJ chief Kuroda said that the BOJ will be “considering and debating” an exit from QQE around the end of the fiscal year 2019, marking the first time that the BOJ chief has put such a timeline on the winding down of its ultra-loose monetary policy.

USDCHF

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Non-Commercials kept their positions in the Swiss Franc unchanged last week with the total position sitting at -16k contracts. Following several weeks of purchases, investors have ceased short covering in CHF given the lack of directional catalysts currently. The SNB had recently fuelled speculation that shift in monetary policy is on course after the bank raised its inflation forecasts for the year ahead. Recent equity market weakness also fuelled an uptick in safe-haven demand for CHF though this has clearly subsided now given the recovery in global markets.

AUDUSD

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Non-Commercials reduced their net long positions in the Australian Dollar last week selling 2.5k contracts to take the total position to 9.5k contracts. Positioning has been fluctuating strongly in AUD over recent weeks as traders struggle to gauge how close the RBA is to lifting interest rates. At its latest meeting the bank struck a far more constructive tone noting the improved economic environment. However, recent data weakness in China and a subsequent fall in commodity prices once again presents some dark clouds on the horizon for the RBA.

USDCAD

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Non-Commercials reduced their net long positions in the Canadian Dollar last week selling 1k contracts to take the total position to 22k contracts. Long positions in the Canadian Dollar have been consistently reduced over the last three weeks as investors dial back their BOC rate hike expectations given the uncertainty posed by NAFTA negotiations. A recent poll conducted by Reuters showed that the majority of analysts expect the BOC to raise rates twice more this year. Traders will be keen to hear the bank's latest assessment at its upcoming rates meeting this week.