The following are the key takeaways from this week's COT report as provided by Scotiabank. (Data in this report cover up to Tuesday Aug 18 and were released Friday Aug 21).
The aggregate long USD position has suffered a sizeable $5.3bn w/w decline, its greatest weekly fall since December 2014, with most of the change driven by considerable short covering in EUR and JPY. Sentiment improved broadly for all currencies, with the exception of CHF; however, we note that changes for CAD, AUD and NZD were relatively minor.
EUR sentiment has improved on the back of short covering, providing for a sizeable $3.1bn narrowing in the net short to $12.8bn. Gross shorts were pared back at their most aggressive pace since mid-June, a trend that is likely to have continued given the remarkable rally in spot.
Investors are adding to risk in GBP, with both long and short positions climbing simultaneously. The net short position is nearly flat at $0.4bn, its narrowest since October 2014.
CAD risk has been pared to both sides for a second consecutive week, with equal position changes leaving the net short roughly unchanged at -$5.1bn—the minor w/w improvement representing a first in 9 weeks. The paring of risk underscores a sense of uncertainty among investors, as they consider CAD’s range bound movement through August. AUD sentiment has remained flat over the past four weeks, halting the prior trend of deterioration that had prevailed from mid-May.
The AUD net short is relatively modest at $3.7bn and uncharacteristically smaller than CAD.
