As suggested in the CFTC Commitments of Traders report in the week ended July 9, NET LENGTH in USD Index jumped +4 639 contracts to 27 056. Speculative long positions gained +2 982 contracts while short positions fell -1 657 contracts during the week. Traders raised long bets but trimmed shorts. Fed funds rate cuts this year appear to have fully priced in the greenback.

Concerning European currencies, NET SHORT for EUR futures gained +4 132 contracts to 35 865. NET SHORT for GBP futures soared +8 738 contracts to 72 982. Speculative long positions added +2 585 contracts while speculative shorts jumped +11 323 contracts for the week. GBP remains volatile as overwhelming support for Boris Johnson as the next Prime Minister has increased the likelihood of a no- deal Brexit, although this is no our base scenario.

On safe-haven currencies, Net SHORT for CHF futures dropped -314 contracts to 10 428. NET SHORT for JPY futures rose +2 424 contracts to 3 572 during the week. Speculative long positions added +1 148 contracts while shorts gained +3 572 contracts. Risk aversion should lend support to safe-haven currencies.

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On commodity currencies, NET SHORT for AUD futures declined -4 728 contracts to 54 007. Speculative long positions decreased -2 990 contracts while shorts plunged -7 718 contracts. Separately, NET SHORT for NZD fell -1 827 contracts to 22 205 contracts last week. NET LENGTH for CAD futures rose +2 933 contracts to 9 226. Recent bullish sentiment about the loonie has been driven by policy divergence. While the Fed is widely expected to lower its policy rate this month and later this year (more below), BOC could likely stand on the sideline, thanks to resilient inflation and job market.

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