Emerging Rally and FX Positioning 12.04.2016

12 April 2016, 08:39
Batur Asmazoglu


 Since Monday, April 4th, positioning has shifted. In the majors, the largest short is still in GBP and the largest long is now in JPY. USD positioning moved to its largest short position since Oct-2012. Non-commercial IMM accounts were net sellers for the 10th time in 11 weeks, sentiment turned more bearish, and global macro funds were small sellers. JPY positioning is back in long territory after one week in neutral territory. Non-commercial IMM accounts and Toshin accounts were buyers. Sentiment also turned its most bullish in nearly five years. GBP positioning moved further into short territory. Noncommercial IMM accounts and global macro funds were sellers. Sentiment also turned more bearish. Non-commercial IMM accounts reduced long USD positioning, net selling for the 10th time in 11th weeks. Like last week, accounts sold USD against every other currency except GBP. While accounts remain net long USD, this is almost entirely against EUR and GBP. Accounts flipped to net long CAD last week for the first time since summer of last year. After a 5% fall in foreign-denominated assets in February, our Toshin Tracker estimates a very small increase (0.3%) since then, implying JPY selling activity. This would be the first month of JPY selling since November. Price action says, USD index is still weak but the trend is losing momentum. EUR has been strong without making new high and it is also losing upside push momentum. As oil broke above 42, commodities and commodity currencies gained some ground back. AUD, CAD and NZD led the way, emerging markets commodity currencies followed. RUB and ZAR have been performing well along with almost all EM currencies. Asian emerging FX seems to be strongest with CNY leading the way. TRY and RUB lag somewhat with political worries and rate cuts being priced in.  Latam lags teh recent rally, MXN has not really pushed higher and BRL is stuck with political crisis. It seems the high yield push is likely to continue in the short term.



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