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Forex Flash: More USD Buying as Specs Turn Net Short CAD and EUR - Nomura

Nomura Strategists have taken a look at this weeks IMM Non Commercial Positioning and note that investors have turned net short both CAD and EUR.

They note that there was continued dollar buying by non commercial traders as there was a decline in long positions, or an increase in shorts, for all other currencies, which pushed over USD positioning into positive territory for the first time since November. They write, “That makes sense, given the general risk-off in the early part of the week with the uncertainty around Italian politics, but the slight increase in JPY short is even more surprising in that regard, especially given the price action (which seemed to indicate large-scale stop-outs). Our real time indicator shows no significant position changes since Tuesday.”

They note that EUR positioning flipped into negative territory once again, in light of the election uncertainty and the EUR has continued to trade poorly since then, which ties in with our indicator showing a slight increase in the short since Tuesday. Looking to JPY they add that net shorts increased slightly by $0.1bn in the week ending Tuesday, but the lack of short reduction is very surprising given the price action: we attribute this to the relatively small volume of exchange traded futures relative to OTC products. CAD IMM positioning flipped into negative territory for the first time since July, in line with the general risk, but also keeping with the general downtrend in the long position over the past several weeks while MXN saw a continued reduction in long, which is in line with market price action.

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The GBP/USD has found traction above the 1.5020 level Monday, refusing to budge much below this region (1.5018 session low). In recent minutes the pair has recovered the mark of 1.5038/41, testing the threshold into positive territory and operating near opening levels.
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Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman notes that the Euro´s month long side is carrying into March.
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