USD Lower to Start Week, Yen Shorts Thin

The US dollar continued lower as markets re-opened for the week. The New Zealand and Australian dollars are the best peformers but Chinese money supply data may be a warning sign. Up later it's Chinese GDP. USDCAD, AUDNZD, NZDCAD are among the Premium trades, currently in progress in the Premium Insights.

The US dollar starts this week in much the way it ended the last one – on its back foot. The moves are relatively minor except for a 15-20 pips in cable and AUD/USD along with a 42 pip rally in the kiwi on a 1.7% q/q rise in retail sales compared to 1.3% expected. Weekend news was generally benign as a skeptical ceasefire gets underway in the Ukraine.

M2 money supply data is difficult to interpret but early-week Chinese data showing the slowest pace of growth since records began in 1998 grabbed some headlines. The good news was on the lending side with new loans at a 5-year high at 1.47T yuan compared to 1.35T expected. The money supply could represent capital outflows but it could also spark easing from the PBOC.

Looking ahead, preliminary Q4 GDP data from Japan is due at 2350 GMT and expected to show the economy exiting recession with 0.9% growth and a solid 3.7% growth pace. A key focus will be on exports and consumption as consumers finally adjust to the sales tax hike from April.

 Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +. EUR -195K vs -196K prior JPY -55K vs -60K prior GBP -38K vs -42K prior AUD -53K vs -56K prior CAD -33K vs -27K prior CHF -5K vs -5K prior

Most pairs didn't move significantly in the past week and that was reflected in a market that lacked any strong directional bias. What's notable is the continued fall in bets against the yen. It's the least-bearish net position since July 22, 2014. USD/JPY looked like it might break out last week but was quickly reeled in. It starts the week at 118.65.