The latest IMM data covers the week from 30 November to 6 December.
Stretched positioning ahead of last week’s ECB meeting: The IMM report. provides a good snapshot on how investors were positioned ahead of the ECB meeting on Wednesday and the EU summit on Friday. Net short EUR positions were running at 33.8% of open positions, albeit down from 37.6% the week before, but still more than 2 s.d. away from the mean. Hence, despite the ECB still seeming very reluctant to deliver a credible backstop in respect of bond purchases, it is still difficult for the market to push EUR/USD significantly lower due to the stretched positioning.
In general non-commercial investors stayed long USD even though positions had been lowered to USD15bn from the record high USD19bn the week before.
Short covering could lift the cyclical currencies: The combination of still surprisingly strong US numbers and less focus on the euro debt crisis after last week’s events could potentially persuade investors to scale back ‘risk-off’ positions. This would imply further USD weakness over the coming week, and the potential for a stronger EUR and stronger commodity currencies (AUD, NZD, CAD and MXN). In particular, the market continues to be short CAD, whereas the market actually added to long AUD positions last week.
Investors add positions for a weaker Swiss franc ahead of SNB meeting: Net short CHF positions were built further in the period covered and have now reached 26.2% of open interest. This probably reflects the growing belief that the SNB will lift its minimum target at this week’s SNB meeting. The calls for a higher minimum target were intensified as inflation dropped to -0.5% in November, underlining that deflation risks have increased in Switzerland.
Stretched positioning ahead of last week’s ECB meeting: The IMM report. provides a good snapshot on how investors were positioned ahead of the ECB meeting on Wednesday and the EU summit on Friday. Net short EUR positions were running at 33.8% of open positions, albeit down from 37.6% the week before, but still more than 2 s.d. away from the mean. Hence, despite the ECB still seeming very reluctant to deliver a credible backstop in respect of bond purchases, it is still difficult for the market to push EUR/USD significantly lower due to the stretched positioning.
In general non-commercial investors stayed long USD even though positions had been lowered to USD15bn from the record high USD19bn the week before.
Short covering could lift the cyclical currencies: The combination of still surprisingly strong US numbers and less focus on the euro debt crisis after last week’s events could potentially persuade investors to scale back ‘risk-off’ positions. This would imply further USD weakness over the coming week, and the potential for a stronger EUR and stronger commodity currencies (AUD, NZD, CAD and MXN). In particular, the market continues to be short CAD, whereas the market actually added to long AUD positions last week.
Investors add positions for a weaker Swiss franc ahead of SNB meeting: Net short CHF positions were built further in the period covered and have now reached 26.2% of open interest. This probably reflects the growing belief that the SNB will lift its minimum target at this week’s SNB meeting. The calls for a higher minimum target were intensified as inflation dropped to -0.5% in November, underlining that deflation risks have increased in Switzerland.