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IMM Positioning: EUR Shorts Retreat On Greek Solution‏

ByDanske Markets
Published 12/04/2012, 01:47 AM
Updated 05/14/2017, 06:45 AM
EUR/USD
0.30%
USD/JPY
-0.49%
GC
-1.86%

The latest IMM data cover the week from 20 to 27 November.

EUR shorts were scaled back last week as indeed indicated by the sustained move higher in EUR/USD seen over the past two weeks. The Greek solution and the corresponding move lower in peripheral bond yields seem to have reminded market participants that the political will among European politicians and the commitment by the ECB have effectively removed a large chunk of the euro tail-risk previously in place.

Investors added to their short JPY positions in the week to 27 November but it is likely that this came to a halt last week when the uptrend in USD/JPY came to a halt. Our G10 scorecard this week recommends to be short JPY, notably as positioning (as measured by risk reversals) hints at further yen downside. Indeed, we think further JPY weakness will be in store as the Bank of Japan is set to embark on more aggressive quantitative easing going forward.

Fiscal cliff concerns continue to hold back sentiment as evident in the build-up of long gold positions and scaling back oil ones. Also, a significant drop in short CHF positions seen last week indicates that the safe havens continue to be in demand. However, this likely also reflects that investors are shifting away from JPY towards the obvious Swiss alternative.

To Read the Entire Report Please Click on the pdf File Below.

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