The International Monetary Market (IMM) non-commercial
positioning is used to visualise the flows of funds from one currency to
another. It is usually viewed as a contrarian indicator when it reaches an
extreme in positioning.
No major change has occurred in major currencies
positioning. The Euro and the Swiss franc are the only two currencies with net
long positions, while the Australian dollar and the Japanese yen remains at
extreme short positioning.
The Swiss francs saw some reduction in its long positioning.
However, investors' positions continue to be supportive of CHF weakness.
Canadian dollar short positions have been trimmed despite Mr
Poloz's inaugural speech on 19 June, which strongly hinted at a welcome weaker
Canadian dollar. Therefore, we do not see this reduction as a contrarian call
to be long CAD. Instead, we see the lack of extremes levels in short positions
as the removal of an hurdle in the on-going devaluation of the Canadian dollar,
whose our medium-term target around 1.0870 (November 2009 peak) in USD/CAD.
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