Intraday Market Thoughts

Abe Storms to Win, Dollar Longs In Check

by Adam Button
Jul 22, 2013 1:07

Japanese voters renewed the LDP mandate for daring reforms in Sunday's election. The best performer last week was NZD while JPY lagged. CFTC positioning data showed dollar longs at a six-week high. 

The coalition of Abe's LDP and the New Komeito party secured a majority in the Upper House election. The result was largely expected but was on the high side of projections although it failed to hit the two-thirds majority needed to revise the constitution.

USD/JPY was choppy at the open but reverted to essentially flat near 100.35.

The Australian dollar threatens to steal the spotlight. The local press is reporting that Australia's Treasury is expected to downgrade growth forecasts and increase deficit estimates. The bigger concern may be a surprise Friday announcement that the Fed will review bank participation in the commodities market.

A day later, the New York Times published an expose on how a Goldman-owned factory was manipulating aluminum prices. Congressional hearings on bank activity in commodities are also scheduled to begin Tuesday.

The confluence of events could create confusion and volatility in the commodities market, something that could hurt risk trades and AUD.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR -37K vs -41K prior JPY -86K vs -80K prior GBP -37K vs -34K prior AUD -71K vs -63K prior CAD -20K vs -24K prior NZD -3K vs -1K prior CHF -4K vs -1K prior US Dollar Index longs at 29K vs 29K prior

1 of 2 GBPJPY longs hit all targets. EURJPY (2), USDCAD (1), USDCHF (1) and AUDUSD (1) trades are also in progress, which all can be accessed in the Latest Premium Insights.

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