Intraday Market Thoughts

Quarter Ends, CAD Shorts Squeezed

by Adam Button
Jun 30, 2014 1:33

The market is search for a theme in early trading. Early week moves have been miniscule, last week's best performers were NZD and CAD while the US dollar lagged. Weekly positioning data showed a rush out of Canadian dollar shorts. A brand new edition of the Premium Insights will be issued tomorrow.

The week ahead may be treacherous due to a holiday-shortened week that includes the ECB decision and non-farm payrolls but it's a different risk in the day ahead. Monday is the final day of the month and quarter and that invites unusual flows.

Bonds, stocks and gold all performed well in the quarter and could attract quarter-end window dressing trades that are likely to reverse due to rebalancing in the days ahead.

On the fundamental side the question hanging over markets is the strength of the US economy. There were positive and negative signs last week but the most outsized reaction came after a small miss in US personal spending. That shows the headline risks are more towards fear rather than optimism.

On the weekend, Japanese PM Abe wrote an op-ed in the FT. The aim of the commentary was to boost confidence in reforms, which he said ramped up this month. He touted employment improvements and brushed aside demographic concerns.

The first report of the week to watch is Japanese May industrial production at 2350 GMT. The consensus is for a modest +1.5% y/y increase but unless the numbers are far out of line, the market is unlikely to react.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +. EUR -58K vs -62K prior

JPY -71K vs -68K prior

GBP +50K vs +53prior

AUD +33vs +27 prior

CAD -5 vs -21 prior

CHF -5 vs +4prior

NZD +6 vs +4 prior

Act Exp Prev GMT
Industrial Production (m/m)
-0.7% 1.7% Jun 29 23:50
Industrial Production (m/m)
1.5% -2.0% Jun 29 23:50
Industrial Production (m/m) [P]
0.5% 0.9% -2.8% Jun 29 23:50

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