USD net long positions increased, EUR net positions trimmed - Rabobank

According to IMM net speculators’ positioning as at September 18, 2018, USD net long positions increased to a new year-to-date high of 37,456 in the week ending September 18, notes the research team at Rabobank.

Key Quotes

“We remain of the view that the ongoing widening of the interest rate differentials will continue to support the USD. On Wednesday the Fed is expected to raise interest rates by 25bps and more importantly Chairman Powell is likely to confirm that Fed officials intend to deliver one more hike this year – four in total – with more hikes coming next year. To put that into perspective, we do not expect the ECB to raise interest rates until September 2019, which for a fast moving FX markets is like an eternity.”

“Capital outflows from emerging markets to US stocks are another important factor supporting the USD.”

“EUR net positions have been trimmed from 11,170 to just 1,666.”

“The increase in bearish bets on GBP was validated by a disastrous EU summit last week when Theresa May’s Chequers deal was firmly rejected by European leaders.”