CAD JUMPS TO NET LONG; SHORTS COVER IN EUR AND JPY
Data in this report cover up to Tuesday Jan 24 & were released Friday Jan 27.
• The aggregate USD long has fallen an impressive $4.8bn w/w to $22.3bn, its lowest level since the U.S. election in November. Sentiment improved w/w for all currencies relative to the USD, however the bulk of the aggregate swing was driven by short covering in EUR ($1.9bn) and JPY ($1.3bn). Broader turns in EUR and CAD appear to have coincided with the U.S. election. The turn in GBP followed the flash crash and the turn in JPY only began in 2017. EUR remains the largest held net short, followed by JPY.
• CAD sentiment has improved for a second consecutive week, swinging into bullish net long territory for the first time since September. The multi-month turn in sentiment appears to have taken place around early November, coinciding with the U.S. election . AUD is the only other currency held net long, the largest with a modest $0.8bn position.
• EUR saw the largest w/w change with a $1.8bn narrowing in the net short position to $7.0bn. EUR remains the largest held net short, however this week’s move appears to be part of a broader turn roughly coinciding with the U.S. election in early November , delivering a cumulative $12bn narrowing from Nov 1.
• JPY has seen a fourth consecutive week of improving sentiment with a $1.3bn w/w narrowing in the net short to $7.3bn. Short covering appears to be dominating following a considerable liquidation on longs though late 2016. Longs appear relatively low, and continued short covering could deliver added support to JPY.