GBP/USD & EUR/USD Longs Capitulate on USD Quick Squeeze

US Greenback, GBP/USD, EUR/USD, COT Report –Analysis

• GBP/USD & EUR/USD Longs Liquidated
• USD Shorts Lower by a Third
• Stretched CHF Longs Might Be Weak

GBP/USD & EUR/USD Longs Capitulate on USD Quick Squeeze – COT Report

Within the newest CFTC reporting interval, which lined the aftermath of the shock hawkish FOMC pivot, speculative internet quick positioning within the US Greenback was aggressively unwound, falling over $6bln. The majority of the USD quick squeeze passed off towards the Euro and the Pound as internet longs had been slashed by $4.3bln (4.2% of OI) and $1.2bln (10% of OI ) respectively. The sell-off rather more pronounced within the Pound given the stretched internet lengthy positioning. What’s extra, latest pushback by the BoE of untimely tightening, supplied one other hit to GBP bulls (possible proven within the subsequent replace). That mentioned, positioning stays a difficulty for GBP, albeit much less so, leaving the foreign money susceptible to sharp pullbacks, ought to danger sentiment soften.

Throughout the remainder of the G10 house noticed modest will increase in internet longs (on an OI adjusted foundation) towards the USD. A marginal decide up in CAD and AUD internet longs, which is considerably reflective of the value motion seen final week and probably indicative of summer time buying and selling circumstances with speculators looking for pro-cyclical currencies vs low yielders. Concerning the Canadian Greenback with BoC tightening properly priced into the foreign money, coupled with the truth that positioning is stretched (97% rank), the Loonie might underperform vs AUD, which is able to play catch up supplied the RBA brings ahead fee hike expectations to 2023 from 2024.

Elsewhere, the Swiss Franc had been in demand, notably amongst leveraged accounts (quick cash). Though, in gentle of the Fed’s pivot and with the SNB remaining very accommodative, dangers look to be asymmetrically tilted to the upside in USD/CHF. Whereas high-beta currencies may additionally carry out properly towards CHF (AUD/CHF and NZD/CHF).

Weekly FX Positioning

Supply: CFTC, DailyFX (Covers as much as June 22nd, launched June 25th)

The Analytical Talents of the COT Report

Methods to Learn the CFTC Report

US Greenback Positioning

Supply: Refinitiv, DailyFX

EUR/USD Positioning

GBP/USD Positioning

Supply: Refinitiv, DailyFX

If you need to obtain the total COT FX breakdown, contact IG.