Intraday Market Thoughts

Yen Rout Continues, Specs Missed Out

by Ashraf Laidi
Nov 3, 2014 0:45

It's not over yet; the yen continues to slide in early Asia-Pacific trading. The Australian dollar also opened the week lower after a soft China PMI. Weekly positioning data from the CFTC showed that before the BOJ decision, yen shorts were at the lowest since July.  In last week's Premium trades, both GBPUSD shorts were closed prior to reaching their final targets, attaining a combined  profit of at least 210 pips. NZDJPY shorts were stopped out, while USDCHF longs deepened their gains and AUDUSD remain progress.

USD/JPY added another 60 pips early in the week and touched as high as 112.99. The pair has added nearly 500 pips in the past three days.

Before the BOJ decision, we wrote: That if the BOJ announces more QE “would easily send USD/JPY through 110. If those headlines hit, jump on them and ride them for as long as you can.”

It's been difficult to buy dips in USD/JPY and it may continue to be so. In the Oct 2012 to Feb 2013 rally, the pair gained 1700 pips and there were no retracements of more than 200 pips (and only one above 150 pips).

The other move early in the week was a tumble as low as 0.8733 in AUD/USD from 0.8798 at Friday's close. The decline was the result of China's official manufacturing PMI falling to 50.8 from 51.2 – a five month low.

Worries about China are always in the background and the Chinese Economic Information Daily also reported that about 20% of small lending companies in the country are unprofitable.

Commitments of Traders

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

EUR -166K vs -159K prior

JPY -67K vs -71K prior

GBP -6K vs -4K prior

AUD -34K vs -32K prior 

CAD -21K vs -22K prior

CHF -20K vs -18K prior

NZD -4K vs -2K prior

 Specs were on the right side of the BOJ trade but not nearly as aggressively as they would have liked to be. At the start of October the net short was -121K and that was nearly halved before the BOJ announcement.

Act Exp Prev GMT
54 Nov 03 1:00
50.2 Nov 03 1:45

Latest IMTs