Global Markets: 

  • Asian stock markets: Nikkei up 0.40 %, Shanghai Composite gained 2.10 %, Hang Seng rose 0.95 % and ASX fell 0.15 %
  • Commodities: Gold up 0.30 % at $1309, Silver gained 0.30 % to $20.70, Crude Oil futures dropped 0.50 % to $101.55
  • Rates: US 10 year yield at 2.47 

COT Positioning Update: 

  • A few points of interest on the EUR bear position this week with the short position build out to about 89k contracts from 63k the previous week. Not only is this one of the biggest position build outs that we’ve seen in this cycle on a one Wk/Wk basis (the last time we had a build this big was in early June when we went from 33k to 57k – right around the June ECB,) but also at this aggregate figure the short position is now at a size that we’ve not seen since late 2013, meaning they’re more short now than anytime during the taper tantrum in 2013. However, we still have a ways to go before we get to where the short peaked out in 2012 around 200k (right before Draghi decided to do whatever it takes).
  • Remember that at the end of last week USDJPY was probing 101.00-10 on geopolitical concerns and the position did get trimmed up a bit to 54k short from 63k in the week prior. Since 2013 (the start of Abenomics), the short JPY position generally has not spend a lot of time sub 60k.
  • CAD long got built out a bit last week too to 20.5k from 16k the week prior this was a level not seen since Feb 2013, but given the late week rally in USDCAD through 1.0800 we’ll see this position trimmed up in next week’s data (all else equal).
  • GBP length continues to get cut back and this week we fell form 38k to 27k this takes us to roughly 50% of the peak length – we topped out at around 57k in early July right after the Mansion speech and back to a level not seen since early April when Carney had just abandoned forward guidance.

Week Ahead in FX:

Plenty of risk events this week, especially out of the United States. Today, US Pending Home Sales will be released. Tuesday will bring Australian New Home Sales and US Consumer Confidence data. On Wednesday, the main events will be German inflation data, followed by US ADP Employment and GDP figures in the early US session and the Fed rate decision & FOMC statement in the later part of the session. The next day, traders will be focusing on German employment numbers, Euro Zone CPI and employment, Canadian GDP and US Initial Jobless Claims data. Finally, Friday will have a series of  Manufacturing PMI data from all the major economies and the US Nonfarm Payrolls and Unemployment Rate numbers.

Upcoming Events: 

  • 13:45 GMT – US Services PMI (59.8)
  • 14:00 GMT – US Pending Home Sales (0.5 % MoM)