According to Rabobank FX analysts, USD net long positions have increased for the second week in a row. This increase was primarily driven by a decrease in short positions. The boost in USD net long positions was influenced by stronger-than-expected second estimates for US Q2 personal consumption and GDP on August 29th. This positive data led to a 4.75bp increase in the 10yr. Currently, traders are pricing in a 32bp cut at the Fed September meeting.
EUR and GBP Net Long Positions on the Rise
EUR net long positions have also seen a rise for the third consecutive week, with a decrease in short positions. Eurozone core CPI inflation met expectations at 0.0% m/m and 2.8% y/y, while the unemployment rate for July was lower than estimated. OIS pricing suggests a 25bps cut at the upcoming ECB meeting on September 12th.
Similarly, GBP net long positions have increased for the third consecutive week, with short positions decreasing. GBP has been the best performing G10 currency against USD this year, providing a return of 4.09%.
JPY Net Long Positions Reach New Heights
JPY net long positions have surged for the third consecutive week, driven by a decrease in short positions. Long positions for JPY are currently at their highest level since February 2021. Additionally, USD/JPY is trading near yearly lows at 142.
Expert Analysis and Implications for Investors
Overall, the increase in net long positions for USD, EUR, GBP, and JPY indicates positive market sentiment towards these currencies. Investors should pay close attention to upcoming central bank meetings and economic data releases, as they could impact trading strategies and currency valuations.
For individuals looking to invest in foreign exchange markets, understanding these trends and developments is crucial for making informed decisions. By staying informed and analyzing market movements, investors can potentially capitalize on opportunities and mitigate risks in the ever-changing world of forex trading.