By eFXdata — Jan 14 - 10:30 AM
Synopsis:
SocGen highlights an opportunity in the heavily shorted CAD and foresees room for further GBP downside, based on positioning data and market sentiment.
Key Points:
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CAD Sentiment:
- Futures data reveal a persistent and substantial net short position in CAD since mid-2023.
- SocGen views the CAD as "much-hated and much-sold," presenting an attractive contrarian opportunity for upside.
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GBP Positioning:
- GBP shorts are expected to grow, reflecting ongoing pessimism surrounding UK fiscal and economic conditions.
- This contrasts with EUR/USD, where short positions may be trimmed.
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Market Context:
- Traders appear cautious on JPY due to mixed signals from the BoJ, which could temper the impact of the anticipated rate hike in 10 days.
- Broader dollar strength remains a dominant theme, driven by global economic uncertainty and favorable US monetary conditions.
Conclusion:
SocGen recommends buying CAD as a contrarian play while expecting further GBP downside, particularly as market sentiment continues to weigh heavily on sterling.
Source:
Société Générale Research/Market Commentary