This data references the week ending Tuesday, September 6th.

EURUSD

Non-Commercials increased their net short positions in the Euro last week selling a further 11k contracts to take the total position to SHORT 93k contracts. This latest build in Euro short positions came ahead of the September ECB meeting where many analysts were forecasting that the ECB would further adjust policy with some looking for an extension to QE and some looking for a rate cut. However, markets were left disappointed as the central bank refrained from easing policy. Whilst the accompanying statement and press conference were broadly Dovish, EUR was supported by comments that the ECB did not discuss extending QE. Despite the ECB reiterating that they stand willing and ready to act if needed, Investors unwound ECB easing expectations in response to the meeting. Finally, the ECB revised higher their 2016 growth forecast whilst lowering their forecasts for 2017 and 2018.

GBPUSD

Non-Commercials reduced their net short positions in Sterling last week, buying 3k contracts to take the total position to SHORT 90k contracts. This continued reduction in short positioning reflects weakening expectations for further BOE easing as UK data continues to defy initial bearish forecasts made during Brexit. Traders await the BOE this week though there now appears to be a disconnect between the bank’s guidance at their last meeting, where they noted that they expected to cut rates again in the near term, and recent data which has shown resilience in key areas such as inflation and manufacturing. Alongside the central bank meeting this week we also have UK earnings and employment data which will give further insight into economic conditions post-Brexit.

USDJPY

Non-Commercials reduced their net long positions in the Japanese Yen last week selling 9k contracts to take the total position to LONG 54k contracts. This reduction in JPY longs reflects the choppy positioning environment which has held markets hostage over recent months as US rate hike expectations fluctuate alongside BOJ easing expectations, which have ultimately proved futile in delivering a weaker JPY rate. The current risk-off mood now lends itself to a resumption of JPY buying. Traders now await the September MPM meeting at the end of the month for the latest guidance from the BOJ.

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