China lowered its growth target on the weekend in a development that could cause some hand-wringing to start the week. Despite the news, early market moves have been negligible. CFTC positioning showed the speculative market getting wrong-footed in CAD and AUD. On Friday, Yellen managed to propose up the dollar for 2 minutes before triggering a classic "buy the rumour sell the fact". The Premium Insights closed NZD/USD short at a 170-pip gain and allowing the EUR/USD long to run.
Expect a healthy dose of China comments in the week ahead as the National People's Congress continues. The early news was that Premier Li Kequiang set a 2017 growth target of “around 6.5%, or higher if possible.” That's a downgrade from 7% previously.
The market has taken the news in stride so far but it will create some jitters that could turn into yen buying and commodity currency selling if any other growth-curbing news is announced..
A separate China headline from the PBOC's Yi said the yuan will remain 'relatively strong' in a slight jab at the US administration.
Other weekend news included a capital raise from Deutsche Bank (DE:DBKGn). That's something the banking giant said it wasn't going to do but the 8-billion euro move to shore up capital will be seen as good news for the Eurozone. Scattered reports of a capital raise helped to boost the euro Friday and make it the best performer last week.
CFTC Commitments of Traders
Forex speculative futures positioning. + denotes net long; - denotes net short
EUR -51K vs -58K prior
GBP -71K vs -66K prior
JPY -50K vs -50K prior
CHF -12K vs -9K prior
CAD +30K vs +25K prior
AUD +52K vs +33K prior
NZD +3K vs +3K prior
Speculators buying AUD and CAD last week picked a bad time to do it. The loonie was the worst performer as the BOC dug in on neutral-to-dovish policy despite solid data. The Australian dollar also fell to a one-month low.