INVESTORS PARE RISK IN EUR & CAD; AUD, JPY VULNERABLE
Data in this report cover up to Tuesday March 22 & were released Friday March 25.
• Bullish USD sentiment has faded for a third consecutive week, the aggregate long falling to levels last seen in mid 2014. Overall positioning is mixed with long positions in JPY and AUD and bearish positions in EUR and GBP. Investors have pared considerable risk in terms of gross positions in EUR and CAD. AUD and JPY appear vulnerable given their relatively extended bullish positions.
• CAD sentiment has improved for an 8th consecutive week, the net short position narrowing to levels last seen in mid-2015. Details include a considerable paring of risk to both sides (bottom right p1) as market participants fade the bearish bias that has prevailed through much of the past year. For AUD, we highlight a notable build in gross shorts following an 8-week run of covering, suggesting renewed confidence among AUD bears. AUD appears vulnerable.
• EUR sentiment has improved for the first week in four, the net short narrowing $1.5bn to $9.2bn. EUR bears have covered their shorts in each of the past two weeks and we note the potential for a resumption of the short covering trend that began in early December. Overall risk for EUR has been pared to both sides, suggesting uncertainty with regards to the near term path. For GBP, the remarkable drop in gross longs has provided for a near-full reversal of the prior week’s build.
• JPY is likely the most vulnerable as we consider its historically extended bullish net long $5.9bn position. Gross shorts are at their lowest level since 2012, and we note the potential for a rebuild.
Regards All Users.