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CFTC commitments of traders: Smallish changes in the net speculative positions this week

  
Analysis, Forex

Weekly Forex futures net noncommercial positioning data for the week ending June 11, 2019

  • EUR short 87K vs 88K short last week. Shorts trimmed by 1K
  • GBP short 45K vs 48K short last week. Shorts decreased by 3K
  • JPY short 45K vs 44K short last week. Short increase by 1K
  • CHF short 25k vs 36k short last week. Shorts decreased by 11K
  • AUD short 63k vs 63k short last week. Unchanged
  • NZD short 16K vs 20K short last week. Shorts decreased by 4K
  • CAD short 33K vs 42K short last week.  Shorts increased by 9K
  • Prior week
The positions remain long USD (short the currencies).
The CHF shorts decreased by 11K The CAD shorts were increased by 9K.
Those were the biggest movers in the week.
EURUSD net speculative shorts remained near the largest levels

The Dollar index moves above 50% retracement

  
Analysis, Forex

The bottom this week was a good one.

The DXY index (dollar index) formed a real nice bottom in trading this week.
The DXY formed a nice bottom this week.
Looking at the daily chart, the low this week stalled near the 200 day MA (green line in the chart above) AND a nice trend line as well.  Holding was bullish. Buyers leaned against the level. Today the price moved above the 100 day MA (blue line) at 97.043.
The US data rewarded the support buyers with a run higher today helped by the better retail sales/industrial production data. GDP estimates were raised with some estimates now at 2% (and above) for the 2Q.
What next?
Drilling to hourly chart, the pair is now trading above the 50% of the move down from the May 30 high.  That comes in at 97.37 and will be close risk for longs. Stay above keeps the buyers firmly in control.   The 61.8% of the move down come in at  97.585. A move above that, and traders will start to eye the ceiling highs from the daily up at the 98.28 to 98.38 area.
The DXY on the hourl chart.

G20 meet June 28 & 29 – FX will be a hot topic. We’ll get a big cue on June 24 on how hot.

  
Analysis, Forex
The reason I highlight this is because on June 24, just a few days before the G20 summit (June 28 and 29) is the US Commerce Dept. makes its final ruling on the proposal on June 24th.
This could well be another front opened up in trade negotiations.
Yen might be a target? Yuan also, of course. And given Trump’s comments just this weak on an undervalued EUR, EUR also. Actually, given the USD strength is anyone safe?
In late May we reported on news the US Commerce Department is proposing a  new rule to impose anti-subsidy duties on products from countries that undervalue their currencies against the USD.

BoA on yen, short Eur and USD against it.

  
Analysis, Forex

Bank of America / Merrill Lynch  like a short EUR/JPY and short USD/JPY

Concerns of negatives to increase in markets ahead of the G20 (June 28/9). Has the potential to see risk off sentiment.
  • recommend selling USD/JPY
BoA says markets are complacent (cite low volatility)
  • “We have a relatively optimistic view for the end game, but are concerned that things can get worse before getting better”
Risk is  a comprehensive agreement at the G-20, but even if so, re-pricing of the Fed to limit risk-on market move, which would limit the downside for yen.

Goldman Sachs w/e note – USD/CNY to break 7 in three months (forecasts)

  
Analysis, Forex

While we await the reference rate setting for the onshore yuan, forecasts from a note from GS:

Goldman Sachs expects the yuan
  • in 3 months at 7.05
  • in 6 months at 6.95
  • in 12 months at 6.80
GS cite yuan to fall to partially offset higher US tariffs. Adds that Chinese policy makers are reluctant to have it above 7 … “psychologically important level”
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