Flash: Time to re-enter USD longs? – UBS

FXstreet.com (New York) - The painful unwinding of some favored short positions was very clear last week in FX markets, notes Research Analyst Gareth Berry at UBS.

Key quotes

“Without firmer US data or policy prospects anchoring the dollar, trades which have ‘done well’ at various points in Q2 were challenged. This is being compounded ‘unfavorable’ news flow: Abenomics is struggling; Chinese data has turned positive for now, while the BoE’s forward guidance disappointed sterling bears.”

“We look to getting back into USD longs but the market adjustment seen last week should be allowed to run its course first. However, USD/JPY selling was the strongest in a month, led by hedge funds liquidating shorts.”