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Investors Long USD Going Into FOMC‏

ByDanske Markets
Published 07/30/2013, 07:11 AM
Updated 05/14/2017, 06:45 AM
EUR/USD
0.07%

The latest IMM data covers the week from 16 July to 23 July.

The latest IMM data show that investors in the week that ended 23 July hold on to long USD positions despite the general dollar sell-off during the week . Aggregated net long USD positions are now equivalent to USD28.0bn (down USD1.4bn over the week). Most of this correction is seen against the euro, with net short positions being cut from 6.1% of open interest to 4.6% . Together with the higher EONIA rates this probably helps explain the steady move higher in EUR/USD during the week . The general long USD positioning indicates that USD might be vulnerable this week if the message from FOMC is soft on Wednesday.

Investors continue to add to short GBP positions . During the week, net short GBP fell from 24.8% of open interest to 33.5%. Short GBP positions are once again trading more than one standard deviation away from the historical mean. It probably reflects high and apparently growing expectations that Mark Carney will ease monetary policy further. It indicates that there is a risk of a more pronounced GBP appreciation if Carney disappoints the market at the Bank of England (BoE) meeting this week and when the guidelines for the forward guidance are presented in connection with the inflation report next week. In other words, positioning indicates that risk/reward is skewed on the downside going into the BoE meeting on Thursday and the Inflation report, due on 7 July.

To Read the Entire Report Please Click on the pdf File Below.

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