Global Markets:

  • China (CNY) HSBC Manufacturing PMI (JUN) [P]: 50.8, Expected: 49.7, Previous: 49.4
  • New Zealand (NZD) Credit Card Spending (y/y): 7.5%, Previous: 3.2%
  • Asian stock markets: Nikkei and Hang Seng both up 0.40 %, Shanghai Composite unchanged, ASX rose 0.70 %
  • Commodities: Gold at $1313, Silver at $20.85, Crude Oil at $107.14
  • Bonds: US 10 year yield at 2.624


COT Positioning Report:

  • When you look at the USD based positions something that sticks out is the GBP length which has gotten to about 53k contracts from just 35k last week. Obviously this pile on is a reaction to the Carney comment late last week but it is noteworthy that we are just a touch through the position where we topped out in April and at a level of positioning that we have not seen since mid 2007 when the positioned topped out at just under 100k.
  • What’s probably more interesting about the IMM data is that long GBP$ and short EUR$ continue to move in opposite directions is that at these position levels we are about 114k contracts short EURGBP from 55k contracts in the prior week. This is the biggest EURGBP position the IMM has seen since 2012 when Draghi saved the world.
  • For their pat EUR$ shorts have gotten to 61k contracts vs 57k in the week prior. While this isn’t a huge single week move it is the highest short in EURUSD since last spring (the short positioned bottomed out at ~84 in May 2013) and is consistent with a short position that has been building out steadily over the course of the past 2 months (ever since Draghi commented to cuts)
  • Even though the price action didn’t really suggest it, the JPY short position was cut by a good deal standing at 68k vs 82k which is interesting as this came in the wake of the BoJ but after higher US CPI data. Speculators probably saw something in the BoJ comments or the charts that made them not want to own short JPY into the FOMC. Not 100% sure what it was, but it may explain why $JPY drifted higher on higher UST yields on Friday.
  • CAD positions didn’t move much. The short in CAD stood at 21.5k from 24k in the week prior. This is the least short of CAD that the market has been since last fall and is about 30% of the peak of the short that came in Jan and Mar around 70k. Of course given the relatively low size of the position now it was interesting to see the out sized reaction to stronger Retail Sales and CPI on Friday in $CAD.


The Week Ahead:

  • Monday – Today, we have a series of Manufacturing & Services PMI data out of the Euro Zone, with the German one being in focus. Later in the day, US Existing Home Sales data will be released, expected at 4.73M.
  • Tuesday – The German IFO Business Climate index will be published in the European session and Bank of England Governor Carney will be holding a speech at 08:30 GMT. In the US session, focus will be on New Home Sales at 14:00 GMT.
  • Wednesday – No important data releases in the EU session, but we will get US GDP and Durable Goods Orders prints at 12:30 GMT.
  • Thursday – Again no data releases out of Europe; the main event will be US Initial Jobless Claims and New Zealand Trade Balance in the evening.
  • Friday – Should be more busy with French GDP, Spanish CPI, UK GDP and German inflation data being released. In the US session, we will get the Michigan Consumer Sentiment figure.


Upcoming Events:

  • 06:00 GMT – Bank of Japan Governor Kuroda speaks
  • 07:00 GMT – French Manufacturing PMI (49.5)
  • 07:00 GMT – French Services PMI (49.4)
  • 07:30 GMT – German Manufacturing PMI (52.5)
  • 07:30 GMT – German Services PMI (55.7)
  • 08:00 GMT – Euro Zone Manufacturing PMI (52.2)
  • 08:00 GMT – Euro Zone Services PMI (53.3)
  • 13:45 GMT – US Manufacturing PMI (56.1)
  • 14:00 GMT – US Existing Home Sales (4.73M, 2.2 %)