Yellen: The Aftermath, CFTC Positions
The most significant part of Yellen's speech was that the word “significant” remained to highlight the slack in the labor market. Its days are numbered but it might have a longer life than some anticipated and that could keep the Fed on the sidelines for longer.
As dovish as Yellen remained, her counterparts were moreso. Kuroda said Japan is only “halfway” to achieving price stability. If USD/JPY has risen 25 big figure since he embarked on his quest, does that mean it can move 25 more? If US economic data continues to improve, 130.00 isn't out of the question.
In early trading the New Zealand dollar is the laggard. One reason is so fresh political intrigue ahead of the Sept 20 election. The results were seen as a foregone conclusion but on the weekend Kim Dotcom formed an alliance with the Mana Party and it could form a bloc that would give the opposition Labour Party the balance of power.
Commitments of Traders
Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.
EUR -139K vs -126K prior
JPY -87K vs -81K prior
GBP +13K vs +19K prior
AUD +37K vs +30K prior
CAD +7K vs +18K prior
CHF -15K vs +17Kprior
NZD +12K vs +12K prior
Every week when we see euro shorts growing it's a reminder of how one-sided positioning has grown in the pair. And that's a good thing because it keeps us on guard against the inevitable correction. On Friday, Draghi opened the door for more unconventional measures but brushed aside the latest soft inflation measures by saying they were temporary.The other thing that stands out is that cable positioning remains net long despite 8 weeks of selling. Along with the Fed the BOE will be one of the first central banks to hike so perhaps a longer period of consolidation rather than a further decline is the most likely path forward. Or maybe there are more longs that still need to be squeezed.
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