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IMM: Ample room for JPY shorts to rebuild after BoJ's shocker - TDS

FXStreet (Bali) - According to TDS FX Strategists, there is ample room for JPY short positions to rebuild among non-commercial accounts after Friday's shock and awe easing ramp up from the BoJ.

Key Quotes

"IMM currency futures suggest that speculative and CTA-type traders remain unabashed USD bulls. The latest positioning data for the week through Tuesday October 28th shows only small or marginal changes in net positioning for most contracts but the aggregate outcome of what changes there were is another record long USD position of USD43.7bn. A hawkish Fed and dovish central banks—for the most part—in evidence elsewhere in the world this week suggest that aggregate USD positioning will not shy away from another new record next week."

"Net EUR positioning saw shorts in the ascendancy for a fifth week in a row, taking the speculative community’s total exposure to net –165.7k contracts in the week through Tuesday. That’s the biggest net bet against the EUR since mid- 2012 and, with expectations growing that the European authorities want to leverage the currency more as a policy tool and spot EUR teetering just above 1.25, short positions are likely to remain the preferred strategy for investors.

"Net JPY shorts have been pared back aggressively in the past month, with the latest positioning of –67k contracts a little more than half of what investors were carrying at the end of September—meaning there is ample room for short to rebuild after today’s shock and awe easing ramp up from the BoJ."

"Investors are merely toying with the commodity currencies by contrast; net positioning in the CAD (short 21k contracts) and the AUD (short 33.8k contracts) are little changed on the week. There is incremental interest to short the Kiwi and while positioning remains limited at –3.9k contracts, this still represents the biggest bet against the NZD since mid 2012— and is a view we broadly concur with."

"Net GBP positions were lifted to –6.2k contracts from –4.4k in the prior week while net CHF short positioning rose to –20.2k contracts (from –17.8k last). That’s the biggest bear bet on the CHF since mid-2013. Investors continue to shun risk via a small net increase in net MXN shorts (-26.8k contracts)."

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