Takeaways On USD, EUR, AUD, & Other Majors From This Week's COT Report
The following are the key takeaways from this week's COT report as provided by Scotiabank. (Data in this report cover up to Tuesday Feb 03 & were released Friday Feb 06).
A clear divergence in sentiment this week saw short positions in EUR, AUD and CAD widen as investors pared back risk in JPY, CHF and GBP. For EUR, a build in the extended net short position suggests renewed confidence in the potential for further downside, pushing it to levels last seen in the 2012 crisis period. The aggregate long USD position remains stable, largely composed of the short EUR, with all other currencies held short as well.
EUR sentiment has deteriorated, with this week’s $1.9bn widening pushing the net short to $28.2bn—its widest level since the 2012 crisis period. Details highlight that the erosion in sentiment continues to be driven by a steady build in gross shorts and hints to renewed confidence among EUR bears.
Sentiment toward CAD & AUD has deteriorated, albeit for different reasons as investors appear to be paring back CAD risk while adding to bearish AUD positions. We note that the recent deterioration in CAD sentiment has failed to match the magnitude of the decline in spot, a contrast to AUD sentiment that has deteriorated in tandem.
JPY, CHF, and GBP all saw their net short positions narrow this week, the result of a paring back in risk (both long and short positions falling). The JPY net short $6.3bn position is now at its narrowest since November 2012.
