This report cover up to Tuesday Jan 5 & were released Friday Jan 8.
• This week’s changes in sentiment have been limited to JPY, its $2.2bn w/w swing pushing it into net long territory for the first time since 2012. CHF is also held net long, and the combination of bullish sentiment in both CHF and JPY underscores an important signal to the underlying tone of broader markets. EUR remains the largest held net short with a sizeable $21.6bn position, followed by relatively minor net short positions in CAD ($4.3bn) and GBP ($2.8bn). The aggregate USD long is at three month lows.
• This week’s minor stabilization in the CAD net short position, narrowing $0.1bn to $4.3bn, follows seven consecutive weeks of deterioration that had provided for a cumulative $3.0bn build in the net short. The deterioration mirrors that observed in spot (middle right p1), suggesting little risk arising from positioning adjustment. Conversely, we highlight considerable positioning risk in AUD given the limited bearish sentiment represented by its modest $1.0bn net short.
• EUR’s sizeable $21.6bn net short position presents considerable risk in the current environment, leaving it vulnerable to squaring the event of further turbulence.
• JPY’s bullish shift in sentiment is the most notable development of the week given its $2.2bn swing into net long territory. This represents the first net long JPY position since October 2012, and its occurrence is all the more remarkable as it has been driven almost entirely by a build in longs, rather than shorts running for cover.
Regards All.