EUR/USD

Non-Commercials reduced their net long positions in the Euro last week selling 5k contracts to take the total position to 133k contracts. This latest bout of short covering came just ahead of the March ECB meeting where investors we mixed as to whether the bank would deliver the hawkish message that bulls have been looking for. Draghi did indeed deliver the bullish message bulls were hoping for saying that the ECB had now dropped its easing bias meaning that the bank will no longer look to increase or extend its bond purchase program due to the strong, broad-based growth momentum in the euro-zone. The market will now be keen to gauge further ECB commentary as it seeks to front-run a rise in interest rates. However, the ECB was clear at the meeting in specifying that interest rates will remain at current low levels “for an extended period of time, and well past the horizon of the net asset purchases.”

GBP/USD

Non-Commercials reduced their net long positions in the British Pound last week selling 7k contracts to take the total position to 5k contracts. Sentiment has shifted sharply on GBO over the last few weeks despite expectations that the BOE will once again raise rates in the coming months. Flailing Brexit negotiations and political uncertainty in the UK have hit the Pound with some emerging data weakness also adding pressure.  The latest industrial production and manufacturing figures for February disappointed the market with manufacturing growing just 0.1% in the three months to January, and industrial production printing 1.3% against expectations of 1.5% for February.

USD/JPY

Non-Commercials reduced their net short positions in Japanese Yen last week buying 10k contracts to take the total position to -87k contracts. The large JPY short position continues to be unwound as traders continue to anticipate a shift in policy by the BOJ. While the bank kept its cards very close to its chest at the latest meeting, offering no guidance on future plans, comments by BOJ’s Kuroda since have fuelled further speculation as the BOJ chief said that the bank will consider dismantling easing in the run-up to the end of fiscal year 2018.

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