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The overriding theme last week was long USD - Societe Generale

FXStreet (Bali) - Based on the latest CFTC positioning data, the overriding theme last week was long USD, notes the FX Strategy Team at Societe Generale.

Key Quotes

"On a macro level the USD gained across the board. In fact USD gained length vs EUR, JPY, GBP, MXN, CHF, CAD, and AUD....get the picture. All of this is to say that the overriding theme this week was long USD."

"Another attention grabber has to be that short EURUSD positioning which rose to a healthy 128k from 108k in the previous week. The last time that the market was this short of EURUSD was August 2012 a mere 2 months after Draghi decided to tell the markets he was ready to do whatever it takes to save the EUR (bear in mind that at that time the short position got to +200k). It is also worth pointing out that aside from that episode in mid-2012 over the past 15yrs that was the only other time that an aggregate position got above 110k contracts so its tough to argue that the market isn't positioned in this trade at the moment."

"It was yet another week of position trimming in GBP where the length got cut in half to 12k from about 25k in the week prior. Remember that in early July this position was long 56k so we've cut back pretty far in just over 1mos time. Also worth pointing out that the last time this position was flat was late last year so clearly the market has taken a lot off of the table going into this week's QIR on Tuesday even as of the end of last week (and we hadn't even gotten so sub-1.68 until Friday so I suspect more length was cut at the end of the week)."

"The CFTC data shows a decent build out in JPY shorts last week at 95k vs 73k in the week prior. Its important to think about this one in the context of the price action/data/event risk. Remember $JPY spiked through 103.0 on Wednesday (the first day of last week's observation period) then came lower after the NFP data on Friday but as of Tuesday we were actually not that far from the highs at 102.80ish at mid-dayon Tuesday. Now as the week closed out we saw a decent push lower and in fact it came on the back of a ~27k contract order on the CFTC at one point on Wednesday so its interesting to consider that this was roughly 30% of the entire position."

"Another eye catcher in the position data is what happened in MXN where we went from long 77k in the week prior to less than half of that position at 32k. This is the least length we've seen since April and is likely a direct result of the market going from around 13.05 to 13.30 over the course of the observation week. Recall that the position peaked here in the mid 90k region in mid June and has been on the decline since but last week was a big hit to the length."

-One of the more interesting things isn't what we saw but what we didn't see in the data. For instance although USDCAD went from the 106 handle in early July to mid 1.09s on Tuesday the position went from about flat to 21k LONG CAD last week. Albeit this is down marginally from 22.6k last week (the cycle high) but this it is still surprising that the move higher in USDCAD hasn't shaken out the shorts. Similarly AUD length dropped from 39k in the week prior to 33k where AUD broke through 9300 in the observation week (although it rebounded marginally on Tuesday)."

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