The latest CFTC positioning data recorded a further increase in short speculative yen positions to above 100,000 contracts, the highest short position for over six years, which will maintain the potential for a sharp correction. Yen selling was, however, still the dominant influence on Monday with USD/JPY pushing to fresh six-month highs around 101.90 while EUR/JPY rose to a four-year high near 138.00.
The CFTC data also recorded a further increase in net dollar longs to a two-month high and the number of long Euro positions fell sharply to below 10,000 contracts which will make it more difficult for the US currency to make fresh headway.
The dollar gained some support from optimism surrounding the weekend deal over Iran’s nuclear programme. There was a sharp drop in oil prices which pushed USD/CAD to a peak in the 1.0580 area while AUD/USD dipped to the lowest level since the first week of September at 0.9120.
EUR/USD was unable to break above the important zone of resistance in the 1.3550-80 area and drifted slightly lower in Asia on Monday. ECB member Hansson stated that the central bank was prepared to cut interest rates further if required. There were also some media reports of increased pressure on the ECB to buy peripheral bonds while background political stresses were also significant and EUR/USD dipped lower to test support near 1.3500.
During the European session, there was also some evidence of a shift in positioning with some corrective recovery for commodity currencies against the Euro which had the knock-on effect of driving EUR/USD slightly lower with EUR/JPY also fading to the 137.30 region.
The US pending home sales data was slightly weaker than expected with a 0.6% monthly decline following a revised 4.6% drop the previous month. There was little overall impact on the dollar with trading activity stifled ahead of the Thanksgiving Holiday later this week. Overall, EUR/USD retreated to test support around 1.3500 as USD/CHF regained the 0.9100 level.
The latest UK mortgage lending data was slightly weaker than expected for October. There was a greater impact on Sterling from a GBP/USD failure to break above the 1.6250 resistance area and the pair corrected back to lows near 1.6150 early in US trading.