Speculative investors on the global foreign exchange markets continue to bet heavily on the US dollar rising yet higher and the euro falling further.
The latest available data concerning trader positioning on the currency markets show traders remain unabashed USD bulls.
According to the CFTC Commitments of Traders Report for the week ending Tuesday, October 28th, only small or marginal changes in net positioning for most contracts occured, but the aggregate outcome of what changes there were is another record long USD position of USD43.7bn.
The news comes as the US dollar surges higher against the euro - the euro dollar exchange rate (EUR/USD) is currently located just off its 2014 lows at 1.2542.
"A hawkish Fed and dovish central banksโfor the most partโin evidence elsewhere in the world this week suggest that aggregate USD positioning will not shy away from another new record next week," says a client briefing released by TD Securities on the matter.
The above quotes are taken from the global FX spot market. It must be noted that your bank will widen the spread on the above numbers when passing on their retail rate to customers. An independent FX provider will however guarantee to undercut the bank's offer thus delivering you more forex. Please see more on this here.
Euro Forecast to Fall Further
Net EUR positioning saw shorts in the ascendancy for a fifth week in a row, taking the speculative communityโs total exposure to net โ165.7k contracts in the week through Tuesday.
"Thatโs the biggest net bet against the EUR since mid- 2012 and, with expectations growing that the European authorities want to leverage the currency more as a policy tool and spot EUR teetering just above 1.25, short positions are likely to remain the preferred strategy for investors," say TD Securities.
Net GBP positions were lifted to โ6.2k contracts from โ4.4k in the prior week.
"Investors are merely toying with the commodity currencies by contrast; net positioning in the CAD (short 21k contracts) and the AUD (short 33.8k contracts) are little changed on the week," report TD Securities.
There is incremental interest to short the Kiwi and while positioning remains limited at โ3.9k contracts, this still represents the biggest bet against the NZD since mid-2012โand is a view we broadly concur with.
Technical Forcasts for the Week Ahead
For those of you looking to enter the foreign exchange market we regard the following weekly video from the team at BK Asset Mangement as being comulsory watching.
The video deals with the major pairs and the levels at which they are expected wthin which to trade.
Also covered are the key economic reports and market-moving events that lie ahead.
