Data in this report cover up to Tuesday May 17 & were released Friday May 20.
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FX sentiment was remarkably quiet for the week ended May 17—just ahead of Wednesday’s FOMC minutes release. Positioning data show muted changes for both EUR and JPY, a reduction in bullish AUD and CAD positions, and a modest widening in the GBP short (note Tuesday’s position date just ahead of its poll-driven rally). JPY remains the largest held net long and GBP has held its position as the largest held net short for a second consecutive week. The bearish aggregate USD position has moderated.
Bullish CAD sentiment has softened a modest $0.3b to a net long $1.8bn position, its first deterioration since late January.The deterioration in sentiment ends a 15 week run of improvement that provided for a cumulative $6.7bn swing off the extended bearish levels from late January. We note that this week’s turn resulted from a paring of CAD risk to both sides with a decline in longs and shorts—suggesting uncertainty on the part of market participants.
AUD sentiment deteriorated for a third consecutive week, with an impressive $1.0bn decline in the net long position to $1.8bn. AUD bulls have pared risk in each of the past three weeks. Note this week’s signal with a renewed build in bearish short AUD positions.
Investors have pared JPY risk for the third week in four, reducing both long and short positions to suggest a lack of confidence with regards to the near term path. Bullish JPY sentiment remains elevated at the upper end of its historical range, just shy of the record $8.2bn net long position from mid-April.