EURUSD

Non-Commercials increased their net long positions in the Euro last week buying a further 12k contracts to take the total position to 138k contracts. Following a few weeks of position squaring, investors have started rebuilding their long positions heading into the March ECB meeting this week. The meeting is widely expected to confirm the ECB’s shift towards a hawkish stance as the bank continues dismantling its easing bias. Given the increasingly strong economic backdrop, traders are expecting the ECB to make further steps towards policy normalization. The January meeting minutes showed that some ECB members were already in favor of removing easing though most weren’t yet confident enough.

GBPUSD

Non-Commercials increased their net long positions in Sterling last week buying a further 5k contracts to take the total position to 13k contracts. Positioning adjustments in GBP have been fairly volatile over recent weeks as traders grapple with the opposing forces of the ongoing Brexit negotiations and hawkish BOE expectations. Given strong UK data and still firm inflation, traders are expecting the BOE to raise rates at the upcoming March meeting given the language used in the last meeting where BOE governor Carney hinted at the likelihood of rate hikes happening “earlier” than currently forecast.

USDJPY

Non-Commercials reduced their net short positions in the Japanese Yen last week buying 12k contracts to take the total position to -97k contracts. The record JPY short position that built up over last year is now starting to be unwound at a quicker pace as traders anticipate that a shift in BOJ policy is on the horizon especially following recent inflation data which was stronger than expected.  Last week BOJ chief Kuroda said that the BOJ will be “considering and debating” an exit from QQE around the end of the fiscal year 2019, marking the first time that the BOJ chief has put such a timeline on the winding down of its ultra-loose monetary policy.