Synopsis: Credit Agricole provides insights into the current long and short positions within the G10 foreign exchange (FX) market, identifying the Euro (EUR) as the largest long position and the Canadian Dollar (CAD) as the largest short. The bank also details the nature of the buying interest for both currencies and the roles different types of investors play.
EUR - Largest Long Position: The EUR is currently the G10's largest market long. The currency experienced increased buying interest last week, with the momentum attributed to flows observed by Crédit Agricole Corporate and Investment Bank (CIB).
Drivers of EUR Interest: The increased interest in the EUR comes from a mix of corporates, hedge funds, and real money investors, while there is noted outflow from banks.
CAD - Largest Short Position: The CAD holds the position of the largest short within the G10 FX markets. Similar to the EUR, it saw fresh buying interest last week, with Crédit Agricole CIB flows influencing this trend.
Drivers of CAD Interest: Banks, hedge funds, and real money investors have been buying CAD, but there is a contrasting outflow from corporates, which indicates a more mixed sentiment toward the CAD compared to the EUR.
Conclusion: Credit Agricole's assessment points to a dynamic G10 FX market where the EUR has emerged as a favored long position, attracting a diverse group of investors. On the flip side, the CAD's position as the largest short is also seeing buying interest, although this interest is mixed with corporates divesting from the currency. The bank's flow data provides a granular look at how different market participants are engaging with these currencies, offering a nuanced picture of the current G10 FX positioning.