Fundamental Weekly Forecasts for US Dollar and AUDUSD - CFTC COT data showed large speculators were their most net-long US Dollar versus Euro short
US Dollar - "Patience may wear thin for those holding USD-long positions rather quickly; recent CFTC Commitment of Traders data showed large speculators were their most net-long US Dollar versus the Euro (short EUR/USD) on record. And though this in itself does not signal that the currency is likely to reverse, it does imply that there may be relatively few traders left to sell. The key question is simple: will interest rate expectations be enough to fuel further Dollar gains? It’s entirely possible, but we’ll keep a close eye on upcoming data given clear risks of an important USD reversal."
AUDUSD - "The Australian Dollar’s down move since April 2013 has tracked deteriorating expectations for 2015-16 Chinese GDP growth (as tracked by a survey of economists polled by Bloomberg). A parallel drop in Australia’s front-end bond yields bolsters the narrative, suggesting traders are betting that deteriorating export prospects will undermine overall growth. This will push the RBA into action, denting the Aussie’s yield appeal. A soft Chinese growth print will probably feed such speculation."
