Large Speculators reported positions (data from CFTC)
- Euro, Canadian and Australian Futures continue to see large speculators increase their short exposure, in line with their technical trends. There appears to be no reason to be fighting these trends at present so we can continue to see bearish setups on D1 and below in line with this money flow.
- GBP Futures remain little changed but this data was taken before talk of rate rises, so we may see this turn to net long over the coming week/s.
US Dollar: The USD finally hit the 98 target projected from the Bullish Wedge and closed the week near these multi-week highs. Whilst near-term momentum could suggest an upper break sooner than later we also have to consider it is a relatively quiet calendar this week from the US, compared to last. Despite a poor start to the week with retail sales missing the mark, overall, the US printed stronger data overall, with CPI data hitting expectations.
Australian Dollar: The downside on AUDUSD has mainly been fuelled by Greenback strength and RBA Governor will be pleased to see the Aussie plummet as he expected. Monetary policy minutes will gain extra attention as traders try to decipher if we have yet reached the end of the rate cut cycle. With FED continuing to make hawkish comments then I see no reason for RBA to be too dovish, especially whilst AUD is making its own way down. CPI data on Wednesday will also be closely watched, especially the trimmed mean as this is the preferred measurement for RBA monetary policy decisions. Glenn Stevens is due to speak following the CPI data so, if we receive an extreme reading, may be treated to further commentary on the economic outlook.
British Pound: Hawkish comments from BoE made Sterling the only G10 currency to finish higher against the Greenback last week. This week MPC release their votes which could see a dissenter or two return (vote against consensus to keep rates on hold). If we do see this then GBP crosses will be further supported. GBPNZD has sky-rocketed to a multi-year highs with GBPAUD sitting comfortably above 2.10. At this stage these trends are expected to continue and may continue to provide vanilla buy-the-dip strategies.
Canadian Dollar: The Bank of Canada cut the overnight cash rate to its lowest level since June 2010 at 0.5%. CAD futures closed the week just above the 2009 lows but appears set to continue the decline and trade to its lowest level since 2004. Large speculators anticipated the move at the beginning of June (when we pointed out they had returned to net short positioning) and, for now, we suspect the downside move on CAD crosses remain to be favoured outlook in the week/s ahead. This week retail sales m/m are expected to have bounced back from the 0.6% contraction previously to 0.7%.
Euro: For now it appears the Greek turmoil has been placed on the back burner, finally allowing traders to focus on more traditional themes (such as the FX calendar and macro economics). This has seen large speculators increase their short positioning as QE is anticipated to weaken the Euro and expectations of US rate hike also playing its part.
New Zealand Dollar: GDT prices have continued to plummet after seeing a 9th consecutive contraction, seeing NZDUSD close to its lowest level since 2009. The medium-term and near-term bias remain bearish, especially in light of further talk of interest rate rise from FED. Thursday presents the Official Cash rate which, in light of recent data, could see a further cut from RBNZ to 3%.
WEEKLY WRAP: 20th July 2015
A market snapshot of last week's money flow with commentary to prepare us for the week ahead.