FX Positioning: Euro net positions decreased before US Employment Report

CFTC positioning data for the week ending 31 August showed further deterioration of EUR long positions just before the US Non-Farm Employment Report. Euro net positions to open interest reached 1.6% - the weakest net positions of Euro over the last 5 year period. Gold has gained more bullish sentiment versus the US dollar reaching 228K net position and 35% in net positions to open Interest. While most of currencies still look neutral, two currencies stand out from others with the most bearish and extreme positioning - AUD and JPY. Indeed, AUD was one of the currencies that rebounded strongly over the last trading week. As the COT report has a 3-day delay, we have the impression that substantial changes could have been made in the net USD positioning that are not yet captured by the report. 

On another side, the positioning data continues to show a major divergence in sentiment on commodity currencies (CAD, AUD, NZD). The main reason for the divergence could be related to the different policies undertaken by the central banks. While the Reserve Bank of New Zealand and the Bank of Canada have recently turned more hawkish, the Reserve Bank of Australia has been quite careful with their tapering plan and rate expectations have remained low.

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