EURUSD

Non-Commercials reduced their net long positions in the Euro last week selling 1.5k contracts to take the total position to 86.5k contracts. While EUR continues to forge higher ground, demand has stalled at these levels as investors react to ECB’s Draghi who has warned over EUR strength working against the eurozone economy as well as reports that tapering could be delayed in response to recent strength in the exchange rate.

Traders had been widely expecting the ECB to announce a further winding down of its QE program at its upcoming September meeting this week. However, in light of these recent comments and reports, it seems there is a large risk that bulls will be disappointed as the ECB may keep policy on hold and use this meeting as a further opportunity to talk EUR down.

USD has been back under pressure following the latest employment reports which showed both the headline NFPs and wage-growth both undershooting expectations. Forecasts of a December rate hike, which had been propping USD up earlier in the year, have now been mostly unwound a downside pressure is expected to remain.

GBPUSD

Non-Commercials increased their net short positions in Sterling last week selling 5.6k contracts to take the total position to -51.5k contracts. Sterling has now been net-sold for three out of the last four weeks as growing uncertainty linked to Brexit negotiations, as well as data weakness, have once again emboldened bearish sentiment among investors. On the data front, this week traders will be watching the remaining PMI readings as well as manufacturing and industrial production later in the week alongside trade balance data.

USDJPY

Non-Commercials reduced their net short positions in the Japanese Yen last week buying 5.5k contracts to take the total position to -68k contracts. JPY continues to be steadily bought as safe haven inflows strengthen in response to an escalation in geopolitical tensions. The conflict between North Korea and the US has deepened significantly over recent months, and with both sides warning of the potential for an all-out nuclear strike, there is a high degree of concern among investors who are seeking the safety of their capital in JPY. On the data front this week, as well as PMI data readings we also have GDP and trade balance data later in the week.