CAD sentiment improves on back of short covering – Scotia Bank

By FXStreet FXStreet (Bali) – As Shaun Osborne, Chief FX Strategis at Scotia Bank notes, CAD sentiment improved materially last week, with the net short CAD position narrowing $1.0bn to $3.7bn following the BoC’s Jan 20 policy hold.

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The aggregate USD long position has fallen to a fresh multimonth low, dropping $5.4bn w/w to $20.9bn (top right p1) at levels last seen in late October. This week’s changes were largely driven by a moderation in bearish sentiment toward CAD and EUR, offset somewhat by a decline in the JPY net long. All three changes are likely the result of shifting central bank policy risks as the position date incorporates both the Fed and BoJ meetings as well as public appearances from the Fed’s Fischer and ECB’s Draghi.

CAD sentiment improved materially, the net short CAD position narrowing $1.0bn to $3.7bn in a somewhat belated response to the BoC’s Jan 20 policy hold. Details include an overall paring of risk, as we note a decline in both long and short positions (bottom right p1)—suggesting uncertainty rather than confidence in the near term path for CAD.

The net short EUR position narrowed a remarkable $5.4bn to $11.9bn at levels last seen …read more

Source:: FX Street