Takeaways From This Week's COT Report: Long JPY At Fresh Record, Short GBP At June'13 Low -Scotiabank

This week’s changes in sentiment were relatively minor, with a steady improvement for most currencies and a deterioration for GBP and MXN. The aggregate USD long has softened modestly and remains close to neutral, bullish JPY positioning has climbed to a fresh record and bearish GBP sentiment has built to levels last seen in 2013. Investors are bullish JPY, AUD, and CHF, neutral CAD and NZD, and bearish MXN, GBP, and EUR.

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Bullish JPY sentiment has climbed to a fresh record with the net long breaching the prior high from March 2008. Gross longs have driven much of the improvement on a YTD basis

GBP sentiment has deteriorated for a fourth consecutive week and bearish sentiment is now at levels last seen in June 2013.Gross shorts are still well off the extended, record levels from 2013, leaving ample space for a continued build.

Investors are paring back EUR risk from both sides, suggesting a lack of conviction with regards to the near term path.

 AUD risk was added to both sides, highlighting a considerable degree of uncertainty while adding to vulnerability. The bullish net long AUD position has climbed to a fresh high not seen since November 2014 and gross longs are at three year highs.

Changes in CAD sentiment were relatively limited on a w/w basis, with a modest $0.2bn rise in the net long to $0.2bn—marking an 11th consecutive week of improvement.