Large Speculators reported positions (data from CFTC)
- For the first time in three weeks USD Bulls pushed the Net position pushed higher, seeing Open interest also rise in tandem.
- British pound's open interest declined due to the removal of 14.1k long contracts and 3.9k short contracts, pushing the Net positioning to 23k short, almost double the previous week. However it should be noted that the increased net short interest has been fuelled by closure of trades as opposed to fresh positions taking a direction.
- No significant changes were seen by large speculators on Euro futures but this is hardly surprising considering the uncertainty there has been in recent weeks around the Eurozone and Greece.
- CAD futures have seen an increase in short interest by bearish traders as we approach the BoC interest rate decision this week. Net short exposure has increased by over 9k contracts helped by 21.6k short contracts.
US Dollar: Another busy week for Dollar crosses with Retail sales kicking off the Greenback calendar tomorrow. Last month's 1% print was the highest since Feb 2013 but this month expected to slow the momentum slightly to 0.7% m/m. Yellen testifies on Wednesday but unlikely to provide any further insight than her talk on Friday, where she showed a more Hawkish side which places her among the general consensus of other FED members: To raise rates some time this year. Headline inflation is expected to soften slightly which will not help the hawkish outlook for the FED, despite warnings from IMF about raising rates too soon. Either way if the FED continue to drop hints about a rate hike then traders will buy USD< regardless of whether they believe FED will actually raise them or not (buy the rumour, sell the fact....)
Australian Dollar: Data out this week fits into the 'nice to know' category but suspect we'll have to look overseas for any lasting directional cue. If there is to be any positive sentiment for Aussie crosses it is likely to be directed by the artificially supported by the host of Chinese data, the artificially supported Chinese stock markets and / or any progress from Greece talks. China data includes Trade Balance, New Loans, GDP and Industrial production. This data set alone could stir the markets, leaving the Chinese stock market and Europe to take care of any unexpected spanners in the works.
British Pound: Inflation has recently crept out of the -0.1% deflationary period, but not far enough to feel it will not return. Forecast to stay 'stable' at 0.1% then we do run the risk of returning to negative, historical lows, so this could be a number to watch. Whilst BoE are not expected to be chancing their monetary policy any time soon a number which will become of increased importance will be the average earnings index, as this may provide further clues to consumer inflation not yet present in headline CPI data. If earnings continue to improve at the current rate of change then this could see dissenters return in favour of a rate hike, helping support GBP crosses in the process.
Canadian Dollar: We could see a rate cut from BoC this week if recent economic data is anything to go by. With a declining stock market, negative GDP growth, subdued inflation and a renewed weakness of Oil prices BoC must be running out of reasons to retain their neutral stance. If a cut is presented, it will then be deciphered from the statement as to whether this is the final cut or if further cut/s are to follow.
Euro: The bickering among EU leaders continued beyond the latest '11th hour' meetings with talk being called off and no resolution found. Even if an agreement had been reached it is still not known how it would have been implemented and pushed through parliament in time for Greece to receive extra funding and / or open its banks. We can expect this to dominate headlines but any catalysts for the markets are likely to be due to a resolution of 'GRExit', not the minute-by-minute headlines themselves. This month's ZEW economic sentiment indicator could make an interesting read as it should include sentiment from the Greek scenario, which has previously not been included. Final CPI is expected to remain flat at 0.2% with no changes in the minimum Bid rate but, as always, the subsequent ECB press conference could be one to watch.
New Zealand Dollar: Last week I had been wondering if GDT price decline would slow; This could not have been further wrong as it accelerated to the downside at its fastest pace since April 2nd. Thursday is a day of interest for NZD traders as it includes GDT prices, NZ Manufacturing and CPI q/q, just after market open. The previous two quarters have printed contracting inflation but the consensus is for this to bounce their to 0.5%. A positive reading is certainly required to help drag NZD crosses from oversold levels but, as we know when trying to pick market bottoms, there is always room for another leg down!