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USD Longs Slashed, CAD Flips Internet Lengthy, No Extra Shorts to Gas GBP/USD Rise


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

  • USD Longs Slashed
  • CAD Flips Internet Lengthy, Asymmetrical Dangers Enhance
  • No Extra Quick Squeeze Gas for GBP

USD Longs Slashed, CAD Flips Internet Lengthy, No Extra Shorts to Gas GBP/USD Rise – COT Report

Within the week by way of to January 14th, a 3rd of web US Greenback lengthy positions had been slashed having dropped $6.87bln. This marks the most important decline in USD publicity since June 2020 with web longs now on the lowest in 4 months. This considerably underscores the truth that the US Greenback has seen a moderately tame response to the repricing within the Fed’s outlook over the past two weeks, the place the consensus is now for a March hike, adopted by three further hikes for 2022, alongside, quantitative tightening. Among the many components which have been behind the muted USD efficiency, regardless of threat urge for food souring has been because of US fairness outflows, significantly from the heavyweight tech shares. In the meantime, there’s a threat on the upcoming Fed assembly that the Financial institution fail to match as much as the lofty hawkish expectations and thus, ought to this be realised, the USD might be anticipated to drag again. Elsewhere, with geopolitical tensions surrounding Russia gaining traction, the Japanese Yen or Swiss Franc can be higher choices for enjoying the safe-haven commerce.

Throughout the commodity currencies, merchants flipped web lengthy within the Canadian Greenback for the primary time since November. The spotlight for CAD can be Wednesday’s BoC assembly the place markets are 80% priced in for a price hike. Nevertheless, what’s attention-grabbing is the truth that the Reuters ballot reveals solely 7/31 economists calling for a hike subsequent week. As such, ought to the BoC increase charges, it’s seemingly that there can be an preliminary spike larger, though, this might be considerably restricted given how aggressive cash market pricing is for the BoC with 142bps of tightening priced in. In flip, my view is that there’s an asymmetrical threat to the Canadian Greenback given the excessive bar to shock on the hawkish facet raises the chance of disappointment. That mentioned, ought to we see threat urge for food stabilise, I favour AUD over CAD.

GBP web shorts have been unwound, which had been offering a lot of the gasoline for GBP upside in current weeks. Nevertheless, in gentle of the cleaning of positioning, the Pound could also be extra weak to the elevated political noise surrounding PM Johnson. This week will seemingly see the Sue Grey report launched, which can be important in dictating whether or not Boris Johnson stays on as PM or not.

Weekly FX Positioning

USD Longs Slashed, CAD Flips Net Long, No More Shorts to Fuel GBP/USD Rise

Supply: CFTC, DailyFX (Covers as much as January 18th, launched December 21st)

The Analytical Abilities of the COT Report

How to Read the CFTC Report

US Greenback Positioning

USD Longs Slashed, CAD Flips Net Long, No More Shorts to Fuel GBP/USD Rise

Supply: Refinitiv, DailyFX

USD/CAD Positioning

USD Longs Slashed, CAD Flips Net Long, No More Shorts to Fuel GBP/USD Rise

Supply: Refinitiv, DailyFX

GBP/USD Positioning

USD Longs Slashed, CAD Flips Net Long, No More Shorts to Fuel GBP/USD Rise

Supply: Refinitiv, DailyFX

If you want to obtain the complete COT FX breakdown, contact IG.





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