CAD gross shorts build $1.7BN W/W, nearing record – Scotiabank

Analysts at Scotiabank points out that according to the IMM data which covers up to Tuesday April 25, the deterioration in CAD sentiment has continued for an 8th consecutive week with a $0.7bn w/w widening in the net short to $3.1bn.

Key Quotes

“Details hint to building risk on both sides, leaving those newly established longs vulnerable to a squeeze. Gross shorts climbed $1.7bn w/w, pushing to 95K contracts—at historically extended levels just shy of the December 2015 record at 108K.”

“The aggregate USD long position was unchanged w/w at $15.9bn with minimal adjustments in EUR, AUD, NZD, and MXN. CAD and CHF net shorts widened, while JPY and GBP net shorts narrowed. GBP remains the largest held net short, and CAD has taken second place leaving JPY and EUR, respectively in third and fourth.”

“Remarkable stability in EUR net short positioning—unchanged at $2.9bn—obscures the considerable reduction of risk to both sides with a $3.4bn decline in both gross long and gross short positions.”

“GBP remains the largest held net short at $7.3bn, however the position has narrowed in four of the last five weeks and bulls appear to be gaining control—adding to positions as bears liquidate theirs. Shorts remain vulnerable, just shy of the record levels from October.”

“JPY has lost its place as the second largest held net short, moving to third after CAD following this week’s $0.5bn narrowing to $3.0bn. The broader shift continues with a third consecutive weekly build in longs and a sixth consecutive liquidation of shorts.”