Originally published by AxiTrader
The latest CFTC report showed no major changes in speculative positioning. Overall, speculators decreased their euro long positions somewhat, while adding to Australian dollar and Canadian dollar longs.
Euro net long positioning declined from 91k to 83k, while pound net short positioning rose from 26k to 29k. It is clear that the pound rally in the recent weeks have been mainly driven by the broad dollar weakness. Fundamentally, the outlook for the pound remains negative due to the reluctant Bank of England and uncertainties around the Brexit process. Should the dollar sustain momentum following Friday´s post-NFP rally, GBP/USD could test 1.28 soon.
Speculators cut their short yen positions somewhat. The amount of net short positions declined from 121k to 112k. Nevertheless, 110 proved once again as strong support level and the outlook for the Japanese yen is negative. The Bank of Japan is unlikely to end its QE program anytime soon. The monetary policy divergence between the US and Japan should keep USD/JPY bid overall.
Meanwhile, speculators have turned even more bullish on the commodity currencies. Australian dollar net positioning increased from 56k to 61k long. Canadian dollar longs increased from 27k to 41k - the highest level since 2013.
The Aussie dollar came under pressure last week, but is likely to remain bid amid positive risk sentiment in global markets and an increase in commodity prices. Major support is seen at 0.7840 and AUD/USD could see a decent bounce from there.