Global Markets:

  • Asian stock markets: Nikkei up 0.10 %, Shanghai Composite gained 0.40 %, ASX rose 0.20 %, Hang Seng dropped 0.50 %
  • Commodities: Gold at $1302 (-0.30 %), Silver at $19.55 (+0.12 %), Crude Oil at $94.87 (-0.50 %)
  • Rates: US 10 year yield at 2.357

News & Data:

  • Bank of England Governor Carney: Don’t need to wait for wage growth to increase before raising interest rates in the U.K.
  • United Kingdom (GBP) Rightmove HPI (m/m): -2.9%, Previous: -0.8%
  • China (CNY) House Price Index: 2.5%, Previous: 4.2%
  • Australia (AUD) New Motor Vehicle Sales (JUL) (y/y): -0.4%, Previous: -2.2%
  • China (CNY) FDI: -0.35%, Previous: 2.20%

CFTC Positioning:

  • EUR net short 126,000 vs short 129,000 prior
  • JPY net short 81,000 vs short 95,000 prior
  • GBP net long 19,000 vs long 12,000 prior
  • AUD net long 30,000 vs long 33,000 prior
  • CAD net long 18,000 vs long 21,000 prior
  • CHF net short 17,000 vs short 19,000 prior
  • NZD net long 13,000 vs long 15,000 prior

Remember the BoE’s QIR and the employment data was out on Wednesday, but even without the info in hand the market continued to trim up length. Going into the report the position stood at 19k long from 12k in the previous week and a peak length in the beginning of July of 56k. One would imagine that by the end of next week (all else equal) this position is pretty close to flat if not a little net short given the price action.

The biggest position move of the week was in MXN length which plummeted last week going from 32k long to 41k contracts short. This is the first time the market has been short of MXN since March and is a pretty sharp decline from just under 80k contracts long in mid-July.

While I would have imagined most of the JPY short washout would have happened late last week (when the pair dipped to 101.60) and people may have already started to get short JPY at the start of last week (we got back through 102.20-30 by Tuesday), the short was still considerably lower at 81k vs 95k the week prior. I guess the real takeaway here is that there were definitely some people burnt by the quick move off the 102 handle a couple of weeks ago.

Elsewhere position trimming seemed a major theme. EUR shorts went down only modestly from 128.7k to 126k. This net short is still higher than any time in 2013. Cad longs fell from 21k to 18k. AUD long feel from 33k to 29.5k. While this position is now reasonably well off of the peak length in Mid-July around 42k, we’re still longer than we were since the taper tantrum last year. CHF shorts went from 18.8k to 17.3k as well. So all told a little bit of position clean up but the positioning themes are largely intact.

The Week Ahead:

On Tuesday, we have the RBA Meeting Minutes and the UK inflation figures, which are expected to come in at -0.2 % month-on-month and 1.8 % year-on-year. In the US session, focus will be on Building Permits, Housing Starts and CPI data. Inflation figures are forecast to arrive at 0.2 % MoM and 1.9 % YoY.

Wednesday should be fairly busy with the Bank of England meeting minutes, German PPI numbers, Canadian Wholesales Sales and the FOMC meeting minutes. The following day, we’ll get Chinese Manufacturing PMI data in the Asian session. In Europe, French and Germany will release their Manufacturing PMI numbers and the UK retail sales figures for July. In the US session, traders will be anticipating Initial Jobless Claims, Existing Home Sales and Phily Fed Manufacturing Index numbers.

Finally, we have Canadian inflation data on Friday, followed by a speech from Fed Chair Yellen and the ECB President Draghi. Upcoming Events:

  • 09:00 GMT – Euro Zone Trade Balance (€14.9B)
  • 12:30 GMT – Canadian Foreign Securities Purchases (C$14.68B)
  • 14:00 GMT – US NAHB Housing Market Index (53)