Listen: some folks are bullish as hell on commodity currencies.
Maybe you noticed.
There are a variety of factors at play here, but you’ll note the following:
- the outlook for crude has brightened materially since late June;
- the Canadians squeezed in a rate hike and that was followed by a blockbuster GDP print that seemed to confirm Poloz hadn’t made a policy mistake (at least not in the short-term);
- the RBA is having an extremely difficult time convincing the market that they’re concerned enough about FX appreciation to take the drastic steps necessary to keep the Aussie from moving above .80 and staying there.
And that’s just to name a few off the top of my head.
Well, even if you don’t care about any of this, you should at least make a mental note of the following charts which show that positioning in CAD, AUD, and NZD is the most stretched it’s been in years:
Meanwhile, positioning in the dollar suggests traders expect the greenback to remain in Jeff Sessions mode – that is, “beleaguered”: