NY Open: Is sterling calling Mayday?
Sterling is taking a beating as the market frets about the Gordian knot that is Brexit. Meanwhile, oil prices have tumbled as the Saudis move to stave off a 1973-style oil crisis.
Head of Commodity Strategy
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The speculative dollar short against nine IMM currency futures increased by 29% in the week to June 12. This before its explosive move higher last Thursday following the European Central Bank meeting..
The net dollar selling was broad-based with the exception of EUR and not least MXN where bearish bets doubled as uncertainty about NAFTA weighed. Despite trading weaker, traders still bought JPY which took the net-long to a seven-month high.
In fixed income the overall short duration of bonds held by leveraged funds were reduced for a fourth week. The CFTC reporting period up until last Tuesday captured the sharp short covering rally on June 7 in US 10s while curve flattening trades continued to be in demand ahead of last week’s Federal Open Market Committee rate hike.