USD net long positions edged lower - Rabobank

According to IMM net speculators’ positioning as at September 4, 2018, USD net long positions edged lower to 33,486 in the week ending September 4 from the year-to-date high of 34,571 set at the end of August.

Key Quotes

“The bullish case for the US dollar remains intact.”

“Given that other major central banks are reluctant to raise rates, the interest rate differentials will continue to widen in favour of the USD. Ongoing outflows from emerging markets are another important factor supporting the USD.”

“EUR net positions shifted to a small long of 7,963 after spending previous three weeks in the bearish territory. That said, we remain sceptical that EUR/USD will be able to regain a sustainable upside traction at the time when the Fed stays well ahead of the ECB on the path of monetary policy normalisation. In addition to that, the turmoil in emerging markets supports the Dollar, while the euro actually depreciated when concerns about Turkey escalated in the first half of August. Rabobank’s Jane Foley expects EUR/USD to lean lower in the coming months to 1.12. At this stage the key technical pivot to watch is set at 1.1530.”

“After growing for six consecutive weeks, bearish bets on GBP have been trimmed amid fading concerns that the UK could leave the EU without a deal.”

“CAD net short positions increased modestly amid lack of progress in trade talks between the US and Canada.”

“Further fall in AUD/USD to the lowest level in more than two years validated the bearish sentiment towards the AUD as reflected in relatively high net short positions.”