EURUSD

Non-Commercials reduced their net long positions in the Euro last week selling 14k contracts to take the total position to 127k contracts. Traders have reduced their upside exposure in EUR for two consecutive weeks now as traders have reacted cautiously to ECB comments which have noted the impact of a weaker US Dollar. The main focus this week will be on the ECB minutes due on Thursday though these are expected to provide little in the way of new information though, despite individual member comments, minutes releases going forward present upside risks given the likelihood of increased debates and discussions around QE exit.

GBPUSD

Non-Commercials reduced their net long positions this week selling 13k contracts to take the total position to 15k contracts. Upside positioning in GBP has now been reduced by around 50% from a month ago as the market squares up some of the upside exposure which might have been premature. The key focus this week will be on the employment and earnings reports due on Wednesday with the market keen to see how wage growth has developed since last time around. Alongside this, traders will be listening to BOE’s Carney, Broadbent, Haldane and Tenreyro who will be testifying on the Inflation Report mid-week.

USDJPY

Non-Commercials increased their net short positions in the Japanese Yen last week selling 2k contracts to take the total position to  -115k contracts. JPY flows continue to be driven by shifting risk sentiment as the market recovers from the sharp declines seen over recent weeks. The short position in JPY remains at highly elevated levels and the risk of a squeeze is ever present on any further damage to risk sentiment or any further USD weakness. With BOJs Kuroda being submitted for reappointment as BOJ chief by PM Abe, the market is confident that BOJ policy will stay on its current course though recent murmurs have highlighted the potential that the BOJ is considering a shift in policy.