USD positioning to continue to exhibit volatility – ANZ

According to the positioning data for the week ending 1 October 2019, both funds and asset managers remained in dollar buying mode even as USD has weakened since the CFTC cut-off date.

Key Quotes

“Looking forward, we expect USD positioning to continue to exhibit volatility owing to multiple factors at play: US-China trade headlines, ongoing political developments in the US, and market expectation of the Fed’s monetary policy path.”

“Funds and asset managers both reverted to selling EUR, as the currency weakened further on worse than expected economic and inflation data. However, both continued with their offsetting positons on GBP; while funds sold, asset managers bought. Both were also overall sellers of safe-haven currencies (JPY and CHF), perhaps owing to continued optimism over the upcoming US-China trade talks.”

“Commodity currencies saw overall buying by funds led by AUD. However, asset managers were combined net sellers, selling AUD while buying CAD and NZD. In the EMFX space, funds only bought BRL while asset managers bought MXN while selling BRL.”