Yen continues to gain against USD; CFTC data shows largest net Yen long positions since March 2008; strong UK housing data boosts GBP, upside short lived as industrial production data was weak

By Kymberly Martin

Against a slightly weaker USD the CAD and NOK were the strongest performers on Friday night. The NZD/USD also pushed a little higher to end the week at 0.6810.

Underpinning the outperformance of the ‘oil-linked’ currencies was a 6.6% jump in the WTI oil price, ahead of the coming weekend’s Doha meeting of OPEC and non-OPEC producers. However, there is no tangible evidence that a production freeze will be agreed. Strong performance of the CAD was also aided by a much stronger than expected Canadian employment report.

The USD was a bit weaker into the weekend. Early on Saturday morning US FOMC Vice-Chair Dudley reiterated many of the dovish views of Chair Yellen. Against the softer USD the EUR/USD ended the week at 1.1400.

The GBP/USD gained a boost early in the evening around the time of the release of strong UK Halifax house price data. However, the currency’s momentum was dampened when softer-than-expected UK industrial production data was released. This prompted the NIESR to downgrade its estimate for Q1 GDP (due 27 April) to 0.3%. However, the GBP/USD managed to climb off its lows to end the week at 1.4120.

The JPY made little further gain on the USD on Friday night. The USD/JPY ended the week just above 108.00. However, CFTC data showed a further extension in speculative JPY long positions (+60.1k from +54.4k). This is the largest net JPY long since March 2008 and has only been exceeded on three or four occasions in history - so clearly extreme.

The NZD and AUD both traded higher against the weaker USD on Friday night. From 0.6780, the NZD/USD ended the week at 0.6810, still well within recent trading ranges.

Get our daily currency email by signing up here:

Kymberly Martin is on the BNZ Research team. All its research is available here.