Global Markets: 

  • New Zealand ANZ Commodity Price Index -2.4 %, Previous: -0.9 %
  • Australia Retail Sales 0.6 %, Expected: 0.4 %, Previous: -0.3 %
  • Asia stock markets: Nikkei unchanged, Hang Seng up 0.40 %, Shanghai Composite gained 1.10 %, ASX down 0.20 %
  • Commodities: Gold at $1293 (-0.10 %), Silver at $20.39 (+0.10 %), Crude Oil at $97.95 (+0.10 %)
  • Rates: US 10 year yield at 2.507 

CFTC Positioning Update: 

  • Last week JPY shorts were cut back to 54k this week the position got built out to 73k. Since the inception of Abeconomics the JPY position doesn’t seem to spend a lot of time sub-60k and this was proven again last week. But interestingly this all happened on the move from 101.50-102.00 and doesn’t contemplate what happened when $JPY got through 103.00 on Wednesday post NFP/Q2 GDP. While there sure was some s/t position washout, the fact that the positioning was where it was, going into that move, goes a way to explain why we only managed to reach 103.00 and not hold with profit taking likely a theme here – but likely we will have to wait until next week to find out.
  • The EUR short position continues to build out and stood at 108k as of Tuesday night vs 89k in the week prior. This is the biggest short the market has seen since late 2012 when the position when the position got to 216k short in mid June (only to recover to a modest 40k long in Feb 2013). Again this is as of Tuesday’s close so this doesn’t capture the move through 1.3400 on Wed-Thurs and subsequent post NFP rebound above 1.3400 on Friday.
  • With spot in the mid 1.07s last week the market got itself as long of CAD (short of USDCAD) as it has been since late 2013 at around 20k contracts. This week on the move through 1.08 the position didn’t get cut and in fact they got marginally longer of CAD taking the net position to 22k. I wonder if they cut out on the move through 1.09 (which unlike other USD positions managed to hold post NFP – perhaps explained by this position?).
  • Similarly, GBPUSD got hit from 1.7050 to 1.6950 in the observation week yet the position only got trimmed to 25k from 27k. Remember though that the market is likely long of GBP from much lower levels as this is one of the longest running positions which started to build out in Dec 2013 (actually the position went from 80k short to 57k long from middle of last June to this June a reasonably straight line). 

The Week Ahead in FX:

Monday should be quiet with only Spanish employment data and UK Construction PMI as key data. Tuesday should be more interesting with the Reserve Bank of Australia (RBA) interest rate decision & statement and Australian Trade data in the Asian session, followed by European Services PMI figures in the London session and then US Factory Orders & ISM Non-Manufacturing PMI numbers.

The following day, we have employment data out of New Zealand, German Factory Orders, Swiss inflation data and UK Manufacturing Production. Later in the day, both the US and Canada will release their Trade Balance figures for July.

Thursday will be very busy with Australian employment data, the ECB interest rate decision & Draghi press conference, the Bank of England interest rate decision and US Initial Jobless Claims.

Friday’s highlights include Chinese Trade Balance figures, the Bank of Japan press conference and Canadian emloyment data.

Upcoming Events: 

  • 07:00 GMT – Spanish Unemployment Change (-116k)
  • 07:30 GMT – Swiss SVME PMI (52.8)
  • 08:30 GMT – Euro Zone Sentix Investor Confidence (9.0)
  • 08:30 GMT – UK Construction PMI (62.0)
  • 09:00 GMT – Euro Zone PPI (0.0 % MoM, -1.0 % YoY)