AUD – Large speculators were really bullish on the Aussie, since they added fresh longs while drastically reducing their short bets. Also, this marks the seventh consecutive week that the Aussie has been taking ground from the Greenback. Positioning activity on the Aussie likely shows speculation that Australia’s Q4 GDP report would show a rebound, or even print an upside surprise after the RBA’s meeting minutes said that the “fall in GDP in the September quarter had reflected some temporary factors.” And as we now know, Australia’s Q4 GDP report did print an upside surprise. Other than that, the bullish positioning activity doesn’t really make sense, since most economic reports at the time were disappointing. Construction work in Q4, for example, fell by 0.2% quarter-on-quarter and 7.8% year-on-year. Capital expenditure in Q4, meanwhile, dropped by 2.1% quarter-on-quarter and 15.5% year-on-year.
Also, note that the COT ( Commitment of Traders ) report shows that the Greenback lost substantial ground to the Aussie while having a mixed performance, so positioning activity was therefore very likely being driven by events, reports, and other catalysts specific to each currency as well.
I’d watch this pair for a week so that Trump and Yellen’s wise words can be factored in to the direction which may see a pull back and then another run.
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