EURUSD

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Non-Commercials reduced their net long positions in the Euro last week selling 23k contracts to take the total position to 63k contracts. EUR has now been net-sold for three out of the last four weeks despite strong signals by the ECB that they will announce further tapering at the upcoming October meeting. Uncertainty ahead of the German elections has provided some headwind to ER demand as traders anticipated the likelihood of the far-right AfD party gaining seats in the Bundestag. The voting did indeed see the AfD gaining seats and markets now await news of how a coalition government will be formed after Merkel’s CDU failed to gain an outright majority.

Draghi will be in the spotlight once again this week with a speech due on Monday, however, he is unlikely to deliver much new information and should reiterate the ECB’s statement that “the recent volatility in the exchange rate represent a source of uncertainty for medium-term price stability”.

GBPUSD

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Non-Commercials reduced their net short positions in Sterling last week buying 36k contracts to take the total position to -10k contracts. The record sterling short position has now been almost completely covered as traders react to the shifting tone of the BOE who have recently highlighted the necessity and expectation for a rate rise in the near future. At their recent meeting, the bank told the market that if the economy continues to perform in-line with currently projections, then some removal of monetary stimulus will likely be appropriate over the coming months. On the data front this week we have only the final release of the Q2 GDP figure on Friday, expected to be confirmed at 0.3% and have a little price impact.

USDJPY

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Non-Commercials reduced their net short positions in the Japanese Yen last week buying 6k contracts to take the total position to -51k contracts. JPY demand continues to increase as uncertainty linked to geopolitical tensions maintains a safe haven bid. The recent BOJ meeting took a dovish turn as, although rates were kept on hold and policy unchanged, one of the new voting members voted in favour of further easing at this stage. On the data front, this week traders will be watching August CPI and Industrial Production both due on Friday with inflation expected to have risen over the month.

USDCHF

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Non-Commercials increased their net short positions in the Swiss Franc last week selling 0.3k contracts to take the total position to -1.5k contracts. Positioning adjustments in CHF continue to be light as market attention is focused elsewhere currently. The SNB has recently reaffirmed its commitment to keeping CHF upside capped, noting that it will remain active in the market as is necessary. A quiet domestic data calendar this week should see limited action in CHF which will be taking its cues from elsewhere.

AUDUSD

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Non-Commercials increased their net long positions in the AUD (Australian Dollar) last week buying 10k contracts to take the total position to 75k contracts. AUD net-long positioning has now hit fresh highs for the year as investors continue to anticipate a rate rise in the near future. The domestic data calendar remains light this week, but traders will be watching RBA deputy governor Debelle who speaks later in the week. With RBA governor Lowe having recently turned more hawkish traders will be keen to see if there is any shift in Debelle’s tone.

USDCAD

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Non-Commercials increased their net long positions in the Canadian Dollar last week buying 8.3k contracts to take the total position to 59k contracts. Trader this week will be focused on BOC governor Poloz who speaks on Wednesday with a press conference following. The bank has now raised rates twice this year and investors continue to anticipate a further rise if economic data continues to print strongly. The main data release this week will be July GDP which is expected to come in unchanged from the prior month.