Greece Defiant, More NZ Housing Curbs

Greece will be back in focus this week as leaders continue to drive a hard line ahead of a summit May 21-22. The euro was the top performer last week while the kiwi lagged. CFTC positioning showed euro shorts remaining resilient.  There are 5 Premium trades currently in progress, including EURUSD, GBPUSD and NZD. Full trades and charts are found here.

Greece refuses to compromise on labor and pension reform and that sets up a headline-heavy week but it's clear that the market is less-concerned about Greece unless a near-term default or Grexit is on the table.

On the weekend, New Zealand Fin Min English unveiled a second round of housing curbs designed to tax home-flippers and make it more difficult for non-resident buyers.

The moves increase the likelihood of RBNZ rate cuts later in the year. House prices remain hot but the underlying economy is cooling and that left the central bank in a conundrum. The latest targeted measures will allow the RBNZ to cut without worrying about fueling the housing boom.

One event to watch early in the week is RBA Deputy Lowe, who speaks at 2330 GMT.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +. EUR -179K vs -190K prior JPY -24K vs -31K prior GBP -31K vs -25K prior AUD +5K vs +1K prior CAD -4K vs -10K prior CHF +10K vs +5K prior

Euro positioning remains stubbornly short and that still means an ugly squeeze is possible. One event to watch in the week ahead is a speech from Yellen on Friday. If she downgrades the economic outlook, it could spark a rout in the pair.

The other notable move is that commodity FX positioning is now neutral for the first time in months. It shows just how reluctant traders are to pay to hold short-AUD positions.