CFTC Commitments of Traders: Pound shorts haven’t been squeezed…yet

Forex futures positioning data from the CFTC for the week ending October 15, 2019:

Forex futures positioning data from the CFTC for the week ending October 15, 2019:
  • EUR short 75K vs 75K short last week. Unchanged
  • GBP short 73K vs 73K short last week. Unchanged
  • JPY short 7K vs 11K long last week. Longs switch to shorts in an 18K drop
  • CHF short 13k vs 11k short last week. Shorts trimmed by 1K
  • AUD short 48k vs 46k short last week. Shorts increased by 2K
  • NZD short 40K vs 38K short last week. Shorts increased by 2K
  • CAD long 13K vs 5K long last week.  Longs trimmed by 1K
  • Prior week

The big moves in sterling came last week and I’m surprised there wasn’t any covering through Tuesday. That’s good news if you’re long GBP because it leaves lots of juice to squeeze.

Risk for USD/CNY is back under 7

Commerzbank analyst says there is a risk of a strengthening yuan,

Citing the possibility of a more definite US-China trade deal.
  • shouldn’t rule out the possibility that good news on trade talks emerge in the near term
Huh. Given the way relations are going I’m going have to say the opposite to Commerz on this.

Cable hits five-month highs as pound jumps after UK and EU reach Brexit agreement

Cable looks towards the 1.30 handle next

GBP/USD D1 17-10

The pound is posting solid gains on the day as Boris Johnson manages to strike a deal with European leaders, although now the big question remains, is the DUP on board and can Johnson get this through a parliamentary vote?
There is plenty of optimism so far but it has to be put into context. Theresa May also had a Brexit deal but could not get hers through parliament at the end of the day. Will it be different for Johnson?
Update: A couple of news sources are reporting that the DUP isn’t quite on board just yet and that is seeing the pound pare some of its gains. Cable back down to 1.2920 from a high of 1.2990 earlier.

GBP/JPY is on a remarkable run

The pair is up 850 pips in the past four trading days

The pair is up 850 pips in the past four trading days
The best place to see the combination of the turn in sentiment on Brexit and the US-China trade deal is in GBP/JPY. The pair has rallied to 139.24 from 130.73 early on Friday.
That’s a monster rally by any standards and captures the squeeze in the pair. Once again today it’s the best-performing duo in a signal that there might be more of a squeeze left.
In the bigger picture, we’re now at the highest levels since May and resistance has now turned to support. The 135.66 level proved to be the retracement to buy this week and unless talks fall apart, I don’t think we will see that again.
Instead, look to the 137.80-138.00 range as an opportunity to buy.

Cable breaks the 200-day moving average for the first time since May

Cable climbs to the highs of the day

A report suggesting the UK and EU are on the cusp of a Brexit deal has sent the pound to the best levels of the day.
Cable is up 135 pips to 1.2743. The break above 1.2714 is the first rise above the 200-day moving average since May. With the break, the next level to watch is the June high of 1.2784 and the figure at 1.2800.
Cable climbs to the highs of the day
The rise in the pound has also lifted EUR/USD and yen crosses.
Update: Fresh highs in GBP/USD to 1.2797, breaking the June high and touching the best level since May 16.

EUR/USD falls below 1.10 on broad US dollar strength

US dollar strong today

The odds of a Fed cut at the end of the month are at 70% and risks are high with a heavy dose of Fedspeak on the agenda this week but the market wants to own US dollars at the moment.
EUR/USD is at the lows of the day, down 35 pips to 1.0992. The decline started after sellers stepped in a 1.1047. It’s the second day of declines after a three-day rally late last week.
US dollar strong today
Elsewhere, the dollar is also at the best levels of the day against the AUD, NZD and JPY.

Japan analyst says USD/JPY to 110 by the end of 2019

An analyst at an asset manager says USD/yen higher on the back of an improving US housing market

  • would stop the Fed from cutting further after a cut coming in October
Also expects US inflation will rise into year end,
  • and the US-China deal to be signed off in Nov also a USD positive (although its not a full resolution of the trade war).

USD up trend is 99 months old soon. Is it over? No, another 12-24 months still to come

The headline is the in summary version of a client note from UBS on the US dollar.

Its a detailed look at the US dollar trend, but adding to the to the headline points in brief.
When and how the dollar might turn is anyone’s guess
  • longterm dollar trend …  As of last month, it was still levying upward pressure … did not appear to be waning materially
  • medium term trend  …  duration of 2-5 years … more or less mirrors intra business cycle growth surges and slowdowns
  • shorter term one that averages about a year…. seems to relate to shocks caused by politics and supply disruptions to commodities … a modest dollar drag today … could reflect the … trade war coming home to roost and the drag on Chinese leading indicators passing, as fiscal stimulus from tax cuts and modest credit easing have begun to filter through

Goldman Sachs says yuan to decline further after the trade tension pause

The investment banks sees USD/yuan to 7.20 in 3 and 6 month time horizons.

  • 12 month view is 7.10
In brief:
  • short-lived pauses in trade tensions have in the past given way to renewed escalation rather than a roll-back of the trade war
  • If anything, disagreements have spread to more dimensions — technology, financial flows, immigration and foreign policy — such that finding ramps to de-escalate is even harder.

Monday morning open levels – indicative forex prices Monday 14 October 2019

Good morning, afternoon or evening to all ForexLive traders and welcome to the start of the new FX week.

As is usual for a Monday morning, market liquidity is very thin. It improves as more Asian centres come on online … prices are liable to swing around on not too much at all, so take care out there.
Some small change from late Friday levels, a few tics here aand there. GBP the biggest.
  • EUR/USD 1.1036
  • USD/JPY 108.35
  • GBP/USD 1.2611
  • USD/CHF 0.9974
  • USD/CAD 1.3204
  • AUD/USD 0.6789
  • NZD/USD 0.6330