EURUSD

Non-Commercials increased their net long positions in the Euro last week buying 7k contracts to take the total position to 98k contracts. EUR upside positioning has now moved to multi-year highs as investors continue to expect the announcement of further QE tapering at the upcoming ECB meeting this month. Comments ahead of the meeting are likely to keep EUR bid as investors try to gauge the likely outcome of the meeting. Data focus this week will be on German economic sentiment along with a speech by ECB chief Draghi on Wednesday.

GBPUSD

Non-Commercials reduced their net long positions in Sterling last week selling 4k contracts to take the total position to 15.5k contracts. While recent focus has predominantly been on the tumultuous political landscape in the UK and ongoing uncertainty linked to Brexit negotiations, the narrative is likely to shift back towards the November “Super Thursday” BOE meeting which is expected to see the bank raise rates by 0.25% in line with recent guidance. Focus this week will be on Inflation, employment and retail sales data. Special attention will be placed on inflation data as, if the current inflationary pressures persist, there is an increased likelihood of “more than a withdrawal of stimulus” by the BOE.

USDJPY

Non-Commercials increased their net short positions in the Japanese Yen last week selling 17k contracts to take the total position to -101k contracts. JPY focus is increasingly turning towards the 22^nd October Japanese elections. Current polling suggests that Abe’s party will retain power by a strong margin which will keep the current mode of Abenomics in play and keep the BOJ’s easing bias in place which should keep the bearish pressure on JPY. Focus this week will mostly be on September trade data due on Thursday. Recent indicators have shown an improvement in the Japanese economy which partially explains the limited JPY downside seen despite the growing short position.