CFTC report: JPY goes wildly long - Rabobank

USD net long positions have increased for the third week in a row. EUR net long positions have decreased. GBP net long positions have decreased and JPY net long positions have increased for the fourth consecutive week, Rabobank's economists Jane Foley and Molly Schwartz note.

JPY net longs are at their highest level since October

"USD net long positions have increased for the third week in a row, driven by a decrease in short positions. Both ADP employment and NFP registered softer than expected at 99k (cons. 145k) and 142k (cons. 165k) respectively, which was compounded by a downward revision to July NFP from 114k to 89k. However, just after US CPI inflation data appear to set the stage for a 25 bp September rate cut from the Fed, at the tail end of last week expectations of a 50 bps move rose again on the back of a WSJ article. Traders are now pricing in a 40% likelihood of a 50bp cut at the September 18th."

"EUR net long positions have decreased, driven by a fall in long positions. Eurozone final Q2 GDP registered softer than expected at 0.2% q/q (cons. 0.3% q/q). The ECB released its decision to cut the deposit facility rate 25bp from 3.75% to 3.50% last week. This decision was unanimously anticipated by Bloomberg surveyed economists and widely anticipated by traders."

"GBP net long positions have decreased, driven by a decrease in long positions. GBP is the best performing G10 currency against USD year-to-date, returning 3.67%. The Oct 30 UK budget is coming into view. JPY net long positions have increased for the fourth consecutive week, driven by a decrease in short positions. JPY net long positions are at their highest level since October 2016, and USD/JPY is trading at yearly lows at the time of writing. While there is little to no expectation of a rate hike at the September 20th BoJ meeting, traders will be looking for any indication as to whether October could be a live meeting."