EUR shorts lengthened last week to their highest levels since early June. A better tone in many EM currencies suggested that confidence in the carry trade may have picked up last week.
"However, given Chinese growth concerns and Fed rate fears, we would expect risk appetite to remain contained. Since the EUR has become a funding currency we would expect net shorts to remain well below levels seen earlier in the year", says Rabobank.
Net USD longs climbed moderately last week ahead of the US July labour report. Confidence in a September rate hike from the Fed appears to be growing, though the Fed's message that the timing of any rate hike is data dependent suggests there is room for some volatility in positions.
Net sterling shorts continued to drop. However, the BoE was far less hawkish than expected on 'Super Thursday' and this could impact net shorts in the next set of data.
JPY shorts increased last week. However, the mood of risky assets is likely to stay fragile and the buildup of net JPY shorts to be tempered, according to Rabobank.
CHF net positions fell back into negative territory for the first time since March suggesting that negative interest rates and the threat of further SNB FX intervention have had some impact.
Bearish pressure on the AUD eased slightly following the RBA policy statement last week. Negative pressure on CAD positions intensified even further as oil prices dropped.
