Analysts at Rabobank note the latest CFTC Commitment of Traders Report showed USD net longs slipped for a sixth consecutive week.
“Expectations that a phase 1 trade deal between the US and China could be close to being achieved coupled with another Fed rate cut in October had boosted risk appetite. This had encouraged flows out of the USD into higher-yielding currencies. That said doubts about the trade deal have crept in during the past couple of weeks and this has created some support for the USD in the spot market.
Net EUR short positions edged lower but there has been no strong direction in recent weeks.
Net short GBP positions dropped back for a ninth consecutive week and are at their lowest level since May.
JPY net positions held in negative ground for a fifth consecutive week and shorts rose to their largest level since June.
CHF net shorts increased for a third week consistent with a drop in demand for safe-haven assets.
CAD net long positions dropped back after their recent surge. BoC Governor Poloz last week reiterated the case for keeping the door open for further policy easing.
AUD net shorts bounced back as hopes for a US/China trade faded. The AUD’s role as a proxy for confidence in China suggests that trade talks remain very much in view.”
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