USD Lengthy Far From Crowded, GBP Sentiment Deteriorates, NZD Flips to Internet Quick – COT Report

US Dollar, GBP/USD, NZD/USD COT Report –Analysis

USD Longs Not But Crowded
GBP Sentiment Continues to Deteriorate
NZD Flips to Internet Quick

Within the week by way of to December 14th, web longs within the US Greenback grew by $1.16bln. Take note, that the positioning information was earlier than the FOMC assembly and thus the change in sentiment possible displays market individuals adjusting positions for a extra hawkish Fed. As such, given the run-up into the Fed, the preliminary response to the choice to my shock had been an unwind of hawkish positioning. That mentioned, whereas the USD is the biggest lengthy on an open curiosity adjusted foundation, positioning is much from crowded.

Sentiment within the Pound continued to deteriorate with web shorts rising by one other $1bln, which had stemmed from a discount in gross longs versus a choose up in outright shorts. Nonetheless, whereas political instability dangers add one other layer of issues for the Pound, with the BoE now embarking on a climbing cycle, draw back within the Pound could also be restricted from right here, barring any notable deterioration throughout the fairness area.

How did the Pound react to past BoE hiking cycles

Throughout the cyclical currencies, positioning within the New Zealand Greenback flipped to web quick after a $1.1bln discount in web longs. Regardless of this modification in sentiment, dangers are geared for extra losses within the Kiwi vs Aussie, notably with markets remaining aggressively priced on RBNZ coverage tightening and thus leaving the bar excessive to shock on the hawkish aspect. A reminder that this had performed a big half in my thesis for expecting AUD/NZD upside in Q4.

Weekly FX Positioning