US Dollar (USD) positions are net long after a two-week dip into negative territory. Euro (EUR) positions are net short for the first time in 15 weeks. Pound Sterling (GBP) net long positions have decreased for the third week in a row and JPY net long positions have decreased for four consecutive weeks, Rabobank’s FX analysts Jane Foley and Molly Schwartz note.
“USD positions are net long after a two-week dip into negative territory, driven by an increase in long positions. In the spot market the USD has been the strongest performing G10 currency month-to-date ahead of the November 5 US presidential election. EUR positions are net short for the first time in 15 weeks, driven by an increase in short positions. At the same time, EUR long positions are at their lowest level since March 2020. This month, the ECB announced its decision to cut the policy rate 25bp from 3.50% to 3.25% and the market is split over the chances of a 50 bps move in December.”
“GBP net long positions have decreased for the third week in a row, driven by a decrease in long positions. UK CPI inflation data printed cooler than expected at 1.7% y/y, and the market has priced in 96% of a 25bp cut at the November 7th meeting at the time of writing. GBP is still the best performing G10 currency against USD year-to-date, returning 2.66%. JPY net long positions have decreased for four consecutive weeks, driven by an increase in short positions. The market is pricing in a no-change decision for the October 31st meeting, and market pricing suggests only 5bp worth of hikes by year-end.”
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