As of Tuesday 24th December 2019:

• Large speculators reduced net-long exposure to USD by -$3.6 billion and currently stand net-long by $14.5 billion.
• GBP traders flipped to net-long exposure for the first time since April
• NZD traders were their least bearish in nine months
• The divergence between CAD futures pricing and positioning continued to widen

USD: Large speculators cannot seem to find the momentum to be net-long USD by over$20 billion. Net-long exposure has essentially oscillated between $10-$20 billion since July, although looking at price action its possible it could dip beneath $10 over the coming weeks.

GBP: Sterling traders flipped to net-long exposure for the first time in nine months. Although perhaps worth pointing out it lasted net-long for just one week on that occasion. That said, the difference this time around is there’s a clear rise in gross shorts and closure of net shorts over recent weeks, which is much more conducive of a stronger move. Yet on the flip side, a weaker USD has helped, and the UK is about to return to the negotiating table with Eurozone members, meaning GBP will remain a politically driven currency so traders would be wise to remain nimble.

CAD: There’s a clear divergence between market prices and positioning. Whilst futures prices have risen to their highest level since Q4 2018, market positioning is barely net-long. They’ll converge at some point, but we’ll need to see if speculators are about to be caught on the wrong side of the move and fuel a more bullish rally (although higher oil prices from Middle East tensions could perhaps help there). Yet domestically, data remains weaker and it appears harder for BOC to justify rates at 1.75. So, get your popcorn out as we could be building up for a larger move, one way or other for CAD prices.

As of Tuesday 24th December 2019:

• Net-long exposure on WTI is its most bullish since September 2018
• Bullish exposure on platinum hit a fresh record high
• Copper traders were their most bullish in nine months
• Gold positioning was again little changed (but this is clearly out of date given the bullish moves unfold this past week)

WTI: Net-log exposure on WTI is its most bullish since September 2018. And that was before tensions flared in the Middle East. It’s worth noting that gross longs have risen whilst gross shorts have been culled, which is what we require for a healthy breakout. Add into the mix the US attacking pro-Iranian personnel and we have the recipe for a breakout. Interesting, it is rising oil prices which has been lacking from the bearish case for a recession. Time will tell if this will break the camel’s back, but for now, oil prices are firming up and positioning has been building a case for a breakout.