EURUSD

(Click on image to enlarge)

Non-Commercials increased their net long positions in the Euro last week buying 7k contracts to take the total position to 98k contracts. EUR upside positioning has now moved to multi-year highs as investors continue to expect the announcement of further QE tapering at the upcoming ECB meeting this month. Comments ahead of the meeting are likely to keep EUR bid as investors try to gauge the likely outcome of the meeting. Data focus this week will be on German economic sentiment along with a speech by ECB chief Draghi on Wednesday.

GBPUSD

(Click on image to enlarge)

Non-Commercials reduced their net long positions in Sterling last week selling 4k contracts to take the total position to 15.5k contracts. While recent focus has predominantly been on the tumultuous political landscape in the UK and ongoing uncertainty linked to Brexit negotiations, the narrative is likely to shift back towards the November “Super Thursday” BOE meeting which is expected to see the bank raise rates by 0.25% in line with recent guidance. Focus this week will be on Inflation, employment and retail sales data. Special attention will be placed on inflation data as, if the current inflationary pressures persist, there is an increased likelihood of “more than a withdrawal of stimulus” by the BOE.

USDJPY

(Click on image to enlarge)

Non-Commercials increased their net short positions in the Japanese Yen last week selling 17k contracts to take the total position to -101k contracts. JPY focus is increasingly turning towards the 22^nd October Japanese elections. Current polling suggests that Abe’s party will retain power by a strong margin which will keep the current mode of Abenomics in play and keep the BOJ’s easing bias in place which should keep the bearish pressure on JPY. Focus this week will mostly be on September trade data due on Thursday. Recent indicators have shown an improvement in the Japanese economy which partially explains the limited JPY downside seen despite the growing short position.

USDCHF

(Click on image to enlarge)

Non-Commercials increased their short positions in the Swiss Franc last week selling 1k contracts to take the total position to -4k contracts. The CHF short position has been building over recent weeks in line with recent commentary from the SNB chair Jordan who said that despite the decline in CHF recently, the currency remains overvalued, requiring the SNB to continue with its expansive monetary policy.  On the data front this week, the focus will be on trade data due on Thursday. Any data weakness is likely to reinforce the view that the SNB will normalize policy later than the ECB, keeping CHF pressured against EUR.

AUDUSD

(Click on image to enlarge)

Non-Commercials reduced their net long positions in the Australian Dollar last week selling 3k contracts to take the total position to 69k contracts. While investor expectations of an RBA rate hike have continued to build over recent months, the resale of the RBA’s October meeting minutes saw increased pushback from policymakers highlighting that the bank is not in a rush to raise rates simply because other central banks are. The minutes reaffirmed the bank’s message that economic data will determine the rate path in Australian and also showed the bank’s concern with the persistently low inflationary environment. Data focus this week will be on September labor market data due on Thursday which bulls will want to see print positively following weaker retail sales data earlier in the month.

USDCAD

(Click on image to enlarge)

Non-Commercials increased their net long positions in the Canadian Dollar last week buying 1.2k contracts to take the total position to 76k contracts. CAD long positions continue to build as investors expect the BOC to raise rates again over the coming months. The bank has raised rates twice this year already and has reiterated their message that further rate hikes will be data dependent. Data focus this week will be on CPI and retail sales due on Friday. Strong prints in these indicators are likely to further exacerbate hawkish BOC expectations, keeping CAD bid while weakness will reinforce the more cautious tone of the BOC over recent weeks as they try to moderate aggressive market expectations.