- ECB meeting and LTRO repayment.
- Investors are adding to short dollar positions.
- Short JPY positions are scaled back.
The latest IMM data covesr the week from January 8 to 15.
· ECB meeting and LTRO repayment. The latest IMM data cover the ECB meeting (where the central bank clearly indicated that it is sidelined for now) and the first part of the recent move higher in euro money market rates (on the back of expected early repayment of LTRO money). Net long euro positions were built to 4 percent of open interest and positioning is thus broadly neutral.
· Investors are adding to short dollar positions. Net short USD positions reached USD21bn and are approaching the recent high from September. Euro buying was the primary driver but unwinding of short JPY positions for a fourth consecutive week also contributed.
· Short JPY positions are scaled back. Net short JPY positions have fallen to 33 percent of open interest from their late December peak at 45 percent. Is this a warning sign of USD/JPY being about to peak also? Not really. The three most recent peaks in short JPY positions (2010:5, 2011:4 and 2012:4) did not lead to a peak in USD/JPY. Rather, investors started unwinding short JPY positions as, or after, spot had peaked.
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