USD: Witching hour – Rabobank

The US Dollar (USD) net long positions have increased. EUR net short positions have increased. GBP net long positions have decreased for the fourth week in a row and JPY positions turned net short for the first time in 11 weeks, Rabobank’s FX analysts Jane Foley and Molly Schwartz note.

USD turns strongest performing G10 currency in October

“USD net long positions have increased, driven by an increase in long positions. USD was the strongest performing G10 currency in October, but its strength ebbed late last week. October NFP registered well-below expectations at only 12k payrolls on Friday, November 1st. This upcoming week is the US presidential election on Tuesday and the FOMC rate cut decision on Thursday. The market is pricing in a 25bp cut.”

“EUR net short positions have increased, driven by an increase in short positions. That said, Eurozone aggregate CPI inflation registered a slightly firmer than expected 2.0% y/y last week. This knocked expectations that the ECB would cut rates by a ‘large’ 50 bps in December.”

“GBP net long positions have decreased for the fourth week in a row, driven by a decrease in long positions. The market is pricing in 79% of a 25bp cut at the November 7th BoE meeting. JPY positions turned net short for the first time in 11 weeks, driven by an increase in short positions. CPI inflation registered in line with expectations at 1.8% y/y. JPY has been the worst performing G10 currency year-to-date and the worst performing G10 currency in October.”