Month End Roundup, CFTC Positions

China's May PMI rose to 50.8 from April's 50.4 in, confirming further stabilisation in the Chinese economy, dampening chances of any stimulus programs from Beijing. The big story in May was the ECB hint at easing but overall moves were unusually small. The Canadian dollar was the top performer while the euro lagged but we look at some of the technical moves. Last week ended with an unwind of some of the moves on the month as the euro and pound drifted higher while the loonie slipped. The lack of major moves in the market is like a tightening coil that will eventually spring.

What happens next will largely depend on fundamentals like the ECB meeting and the bevy of tier 1 US indicators in the week ahead but technicals will also offer hints.

GBP/USD stalled out at 1.70 and slipped in May but the decline wasn't so severe that it could easily be called a reversal. That the pound was able to limit losses to 250 pips after a long uptrend shows that buyers may still be in control.

A closely watched chart was AUD/NZD, which looks to be breaking out but another notable chart is NZD/USD as it flashes signs of topping, including an outside reversal on the monthly chart. Falling milk prices and aggressive talk from the RBNZ could add a fundamental reason to sell.

Another spot to watch is seasonal patterns. June FX seasonals are almost nil but precious metals are extremely weak. June is the worst month on the calendar for gold but silver is exceptionally weak, averaging a 2.95% decline over the past 30 years – 100 basis points worse than any other month The trend is even more pronounced in the past decade.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +. EUR -17K vs -9K prior JPY -59K vs -54K prior GBP +35K vs +33K prior AUD +16K vs +19K prior CAD -22K vs -26.5K prior CHF -4K vs +5K prior NZD +18K vs +18K prior

The euro bears continue to add. Late on Friday the FT cited sources talking about negative rates and unlimited LTROs with a funding-for-lending kind of scheme attached. That's a fresh reason to sell.