Pound Sterling Forecast Deteriorates, Euro Outlook Improves According to CFTC Data

October 20, 2015 - Written by Frank Davies

STORY LINK Pound Sterling Forecast Deteriorates, Euro Outlook Improves According to CFTC Data

FX Traders Forecast US Dollar (USD) Exchange Rate Has Peaked

The latest Commodity Futures Trading Commission (CFTC) data, published on Friday afternoon, served to confirm what many FX insiders had already been thinking – the US Dollar (currency : USD) appears to have near-term peaked against the other sixteen most actively traded global currencies.

30% Forecast of 2015 Fed Interest Rate Hike Keeps US Dollar Pressured

The CFTC figures, which measure the number of long and short positions, (i.e. the volume of ‘up bets’ and ‘down bets’ held by large scale market speculators), showed net long positions on the Buck had fallen to their lowest level in over twelve months during the seven days leading up to last Tuesday. The sharp drop from $20.89bn worth of ‘longs’ on the Greenback during the week to the 13th October, compared with $18.97bn the previous week, suggests that investors are in tune with futures markets which now forecast only a 30% chance that the US Federal Reserve will increase its benchmark interest rate before the turn of the year.

EUR Predictions: Euro Exchange Rate Sentiment Improves

The CFTC statistics were also notable for a marked improvement in sentiment towards the euro (currency : EUR), revealing a drop from $88.81bn down to $80.58bn in the number of net ‘short’ positions on the single currency. However, it should be noted that the figures covered the period leading up to, and not including, comments from senior European Central Bank rate-setter Ewald Nowotny suggesting that his Bank’s ongoing Quantitative Easing programme could be extended and deepened. Analysts forecast that the next set of CTFC data could show a deterioration in market participants’ willingness to hold euro-denominated assets.

Pound Predictions: GBP Forecast Clouded by BoE Rate Hike Speculation

Meanwhile, investors’ willingness to hold the Pound Sterling (currency : GBP) decreased according to Friday’s CFTC stats. The expansion of net Sterling-short positions from $4.53bn the previous week to $7.53bn at the latest count suggests that speculators consider any tightening of policy from the Bank of England a highly unlikely event in the short to medium term.

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