CFTC Report Reveals Defensive Currency Positioning Backdrop
The latest CFTC report reveals a defensive currency positioning backdrop in the week leading up to September 22. Sterling and Euro shorts deepened, while Yen longs were cut sharply.
Speculators reduced their exposure to the Japanese Yen by nearly 72.0K contracts, with USD/JPY rising strongly to revisit the 157.40 region. This confirms a more defensive currency positioning backdrop, although net positioning is near the 88th percentile and further price confirmation would strengthen the move.
The Euro saw its non-commercial net shorts almost double to just over 52.3K contracts, with EUR/USD selling off to the mid-1.1400s during the period. This also confirms a defensive positioning backdrop for the Euro, although speculative exposure is near the 8th percentile and price action would validate or deepen the divergence.
The report highlights mismatches between price and positioning in several assets, including EUR, GBP, and CHF. These currencies are experiencing opposing flows, which raises questions about the reliability of current trends. The most crowded exposures include Gold at the 95th percentile, while GBP sits near the 1st.