MNI's FX Pi noted that traders are the most...>

FOREX: MNI's FX Pi noted that traders are the most bullish on the USD since May

2017 at the expense of EUR, GBP & CAD. Despite the USD's recent strong

performance, the index only sits at 6-month highs, while sentiment is the most

bullish in over a year. USD sentiment is not only contingent on the Fed rate

cycle, as global instability continues to feed strength in the currency.

- Markets' net EUR position plummeted to the lowest level of the year as the

fallout from Italy's political crisis & looming threat to Spain's government

leaves the Eurozone on course for a summer of uncertainty.

- Market seems reluctant to shed JPY longs despite the position bearing little

fruit over the past month, giving evidence of a market that wishes to hedge

against political uncertainty despite no material signs that BoJ policy will

change in the JPY's favour in either the near- or medium-term.

- GBP Positioning Indicator sits at 12-month lows as a distinct lack of clarity

over the Irish border hampers Brexit negotiations & as a result, the investment

case for GBP. Prolonged decline in BoE rate hike exp. doing little to shore up

sentiment.