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CFTC Commitments of traders: EUR shorts increase as the price moves lower

  
Analysis, Forex

Forex futures net positioning data for the CFTC for the week ending February 18, 2020

  • EUR short 92K vs 86K short last week. Shorts increased by 6K
  • GBP long 29K vs 21K long last week. Longs increased by 8K
  • JPY short 27K vs 26K short last week. Shorts increased by 1k
  • CHF long 2K vs 4K long last week. Longs decreased by 2K
  • AUD short 38k vs 33K short last week. Shorts increased by 5K
  • NZD short 12K vs 4K short last week. Shorts increased by 8K
  • CAD long 8k vs 10K long last week. Longs decreased by 2K

The EUR is the biggest position with the short at -92K from -86K last week. The shorts are winning as the price reached the lowest level since 2017 this week.

Forex futures net positioning data for the CFTC for the week ending February 18, 2020

AUD/USD on 0.65 big figure, first time in a decade

  
Analysis, Forex
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Australia is closely interlinked with China’s economy, and thus getting hit by the fallout of the outbreak

AUD/USD under 0.66 first time since 2009 with the news worsening on the coronavirus today, cases accelerating in South Korea. A freer media in South Korea reporting on cases is further cementing doubts about the veracity of the data on the virus impact out of China.
NZD taking a hit also
ps.  This from Goldman Sachs overnight:
  • “The number of ‘missing work days’ in China will be roughly equivalent to the entire US workforce taking an unplanned break for two months.”

Eight culprits for yen weakness

  
Analysis, Forex
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What has dropped the yen to the worst levels since May

Bloomberg lays out eight factors:
  1. Dollar demand seen from global central banks especially in 2-year and 5-year notes
  2. Japanese moves ahead of year end
  3. Short covering and a run on stops
  4. A surge in yen options trading on the break of 110.00 and related to coronavirus fears
  5. An unwind of shorts in USD/JPY and EUR/JPY
  6. Chinese measure to support parts of its economy reduced safe-haven demand
  7. Technical momentum
  8. Worries about a recession in Japan
Many of these overlap but that’s the buzz.

Dollar Index rises to the highest since 2017 (As Expected on Fire Fire )

  
Analysis, Forex

The dollar keeps on rollin’

The dollar keeps on rollin'
USD/JPY is the fuel for the Dollar Index rally today but the bulk of the recent move was EUR/USD falling in 11 of the past 13 days.
A rise above 100 should grab a few more headlines if it can get there.
There dollar ticks a lot of boxes right now. It can do well in a strong global economy because of investment flows and relatively higher rates; it can do well in a weak global economy on risk aversion. It’s really in a sweet spot and I could see it rallying to much-higher levels in either scenario.

CFTC Commitments of Traders: Euro shorts continue to build

  
Analysis, Forex
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Weekly FX futures positioning data from the CFTC for the week ending Feb 11, 2020:

  • EUR short 86K vs 75K short last week. Shorts increased by 11K
  • GBP long 21K vs 13K long last week. Longs increased by 8K
  • JPY short 26K vs 21K short last week. Shorts increased by 5k
  • CHF long 4K vs 5K long last week. Longs decreased by 1K
  • AUD short 33k vs 43K short last week. Shorts decreased by 10K
  • NZD short 4K vs 2K short last week. Shorts increased by 2K
  • CAD long 10k vs 19K long last week. Longs decreased by 9K

Coronavirus FX implications: The good, the static, & the bad

  
Analysis, Forex
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What to watch for in the outbreak

 3 scenarios for Coronavirus and its FX implications.

“Coronavirus was unknown to asset markets two months ago, may disappear as a factor within a few months, but may also evolve into a major global supply shock if it spreads and intensifies. We lay out the alternative scenarios on how the disease could evolve and what the short-medium term FX responses might be. Our subjective assessment is that current asset market pricing probably lies somewhat closer to the static than good scenarios,” SC notes.

“FX winners (W) and losers (L) under our good scenario where the disease abates:

•   W: CAD, CNY, MXN, KRW, IDR, RUB

•   L: USD, CHF, JPY

FX winners (W) and losers (L) under our static scenario of neither major intensification nor elimination:

•   W: USD, JPY, CHF, MXN

•   L: KRW, TWD, THB, SGD, MYR, AUD, NZD, EUR, CNY, CAD

FX winners (W) and losers (L) under our bad scenario where the disease intensifies and spreads:

•   W: JPY, USD

•   L: KRW, TWD, THB, SGD, MYR, IDR, INR, AUD, NZD, EUR, CNY, CAD,”

EUR/CHF threatens a three-year low as some risk aversion creeps in

  
Analysis, Forex
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The euro is soft on all fronts

The euro is the laggard today as the pain trade continues for euro bulls.
EUR/CHF is no exception as the pair threatens the low of the year at 1.0663. We’re just 5 pips from there now and if that breaks, the next big support level is the 2017 low of 1.0632.
The euro is soft on all fronts

More risk aversion is creeping in today as the minutes tick by. Stocks in the US are holding up but Treasury yields are sliding and gold is climbing.

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