US Dollar, EUR/USD, GBP/USD, COT Report –Analysis
- Euro Outlook Remains Constructive Amid EU Summit
- Canadian Dollar Sold on Rallies as Range Remains Intact
- US Dollar Selling Persists
The Predictive Power of the COT Report
Source: CFTC, DailyFX (Covers up to July 14th, released July 17th)
EUR/USD Bulls Rise Amid EU Summit, CAD Sold on Rallies - COT Report
CFTC data ending July 14th continues to display a bearish picture for the US Dollar as investors boost their net shorts by $2.2bln against G10 currencies, taking overall USD shorts to a 2yr high. This comes amid the persistent COVID-19 related uncertainty prompting a halt to reopening plans in several US states.
Speculative buying interest in the Euro remained buoyant as expectations of EU officials finding an agreement on the recovery fund plan increased. In turn, Euro net longs saw a $1.2bln rise to $15.8bln, further cementing the case for a constructive outlook for the Euro with the YTD highs (1.1497) in focus. Eyes on the Swiss Franc, which saw net longs near enough double to $900mln. As the EU near an agreement on the recovery fund, confirmation may bode well for EUR/CHF amid a reduction in sovereign risks.
Across risk-sensitive currencies, net longs in the AUD and NZD saw a marginal increase, however, positioning remains relatively neutral. The Canadian Dollar saw shorts pick-up, despite recent gains in the Loonie, suggesting that investors have adopted a sell-on rallies approach in CAD. As it stands, USD/CAD has maintained a 1.3400-1.3750 range with last week’s price action highlighting that short-term key support resides at 1.3500.
The Pound witnessed a slight reduction in net shorts ($221mln), owing to an increase in gross longs. However, with outright shorts remaining at current levels, speculators have yet to take a positive view on GBP amid the persistent uncertainty regarding EU-UK trade negotiations.
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