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CFTC commitments of traders. Net dollar buyers in the net speculative futures positions this week

  
Analysis, Forex

Forex futures positioning data for the week ending May 19,2020

  • EUR long 72K vs 78K long last week. Longs trimmed by 6K
  • GBP short 19K vs 14K short last week. Shorts increased by 5K
  • JPY long 28K vs 28K long last week. Longs unchanged
  • CHF long 9K vs 7K long last week. Longs increased by 2K
  • AUD short 39k vs 35K short last week. Shorts increased by 4K
  • NZD short 16K  vs 16K short last week. Shorts unchanged
  • CAD short 35k vs 32K short last week. Shorts increased by 3K
Looking at the net speculative positions by currency show
  • The EUR, and CHF long currency  positions were trimmed.
  • The GBP, AUD, and CAD short currency positions were increased.
  • Two positions – the JPY and NZD were left unchanged in the current week.
So overall, the net speculative positions were dollar buyers (short currencies) as of the close of business on Tuesday.  The EUR remains the largest speculative position at long 72K.  The EURUSD did move up (peaked on Thursday, before retracing 50% of the move up from last week’s low.

China reaffirms that it is to steadily promote the internationalisation of the yuan

  
Analysis, Forex
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Comments via Chinese state media, Xinhua

China
  • China will increase two-way fluctuations of the yuan
  • China is to improve market-based currency formation mechanism
  • China will deepen market-based interest rate reform
  • China to allow foreign controlled companies in more sectors
  • China to ease market access in the services sector
  • China will minimise direct interference from government on micro-economic activities
Some interesting remarks being communicated at an interesting time. If anything, I would argue that this repeated pledge to further open up its economy and financial markets is to reassure investors that the overall landscape has not changed.
In the big picture though, you have to wonder how the amount of nationalism and xenophobia brought about by the coronavirus crisis is going to translate into business/investment decisions of many companies from all countries across the world.

CFTC commitments of traders. Little change in the speculative positions this week

  
Analysis, Forex

Forex futures positioning data for the week ending May 12, 2020

  • EUR long 78K vs 76K long last week. Shorts increased by 2K
  • GBP short 14K vs 12K short last week. Shorts increased by 2K
  • JPY long 28K vs 27K long last week. Longs increased by 1K
  • CHF long 7K vs 8K long last week. Longs trimmed by 1K
  • AUD short 35k vs 33K short last week. Shorts increased by 2K
  • NZD short 16K  vs 15K short last week. Shorts increased by 1K
  • CAD short 32k vs 32K short last week. Unchanged for the week
Highlights for the week:
  • The EUR longs remain the largest of the major currencies and steady in a 77K to 87K range (over the last 5 weeks).
  • The speculative positions were pretty much unchanged from last week. The biggest change were 2K changes in EUR, GBP,  and AUD.
Forex futures positioning data for the week ending May 12, 2020_

EURCHF to parity?

  
Analysis, Forex

Via Bloomberg

Via Bloomberg  
The options market is pricing in the possibility of EURCHF below parity in 12 months time. The strength of the CHF is a constant concern for the Swiss National Bank keen to defend its export market.
 SNB, EURCHF floor, 1.200
The options pricing chimes with Thomas Jordan’s recent comments that the SNB are making a ‘substantial commitment regarding FX intervention and that they might cut interest rates further. Furthermore, sight deposits for the period ending May 8 showed a big increase.
Now, Thomas Jordan has said that the SNB is not thinking of imposing a new minimum exchange rate. Remember Jan 2015 and what a disaster that was when the SNB gave up defending the EURCHF peg?  However, don’t rule out a new minimum exchange rate for EURCHF indefinitely.
Here are some things to look out for that could prompt the SNB to act:
  • the pace of currency appreciation in the spot market
  • the franc’s real effective exchange rate
  • the depth of deflation in the nation (-0.3% is already factored in for 2020 in its bulletin)
  • the strength of inflows into the nations assets
One key think to remember, if the SNB do act, or do put in a new minimum level. just don’t over leverage. Remember, there are old traders and there are bold traders. However, there are no old, bold traders.

CFTC commitments of traders: EUR longs trimmed for the 2nd week in a row.

  
Analysis, Forex
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Forex futures positioning data for the week ending May 5, 2020.

  • EUR long 76K vs 80K long last week. Shorts trimmed by 4K
  • GBP short 12K vs 7K short last week. Shorts increased by 5K
  • JPY long 27K vs 32K long last week. Longs trimmed by 5K
  • CHF long 8K vs 6K long last week. Longs increased by 2K
  • AUD short 33k vs 38K short last week. Shorts trimmed by 5K
  • NZD short 15K  vs 14K short last week. Shorts increased by 1K
  • CAD short 32k vs 29K short last week. Shorts increased by 3K
Highlights:
  • the largest position change was 5K in the GBP, JPY and AUD. The GBP positions were increased by 5K, while the JPY and AUD positions were trimmed by 5K
  • The EUR long remains the largest position, but is lower for the 2nd week in a row. The net long over the last 2 weeks has seen the 87K to 76K this week
  • The AUD and CAD are the next largest positions at 33K and 32K respectively. However, traders are short AUD,and long CAD.
Below is a chart of the deposition in the EUR.  Although lower from the recent peak, it is still near high levels for the year, and high levels going back to June 2018.
Forex futures positioning data for the week ending May 5, 2020.
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