Investing.com - Financial Markets Worldwide

Market Caught On The Wrong Foot

ByDanske Markets
Published 06/24/2013, 07:26 AM
Updated 05/14/2017, 06:45 AM
EUR/USD
0.16%
AUD/USD
0.05%
DRP
0.00%

The latest IMM data .

The IMM data, which covers the week from June 11 to 18 show that investors had turned net long EUR/USD by last Tuesday at the same time as the pair peaked around 1.34. This is only the second time since 2011 that investors have been net long (last was in January), and helps explain the 3% drop in spot following Wednesday's FOMC meeting. While long euro positions are likely to have been significantly cut back since, there should be potential for re-positioning to support a move lower in the EUR/USD.

AUD shorts at September 2008 levels. Net short AUD positions were built further and have now reached 35% of open interest - almost the peak from September 2008. When looking at the three most recent extremes in net shorts (April 06, September 08 and June 12), these have all more or less coincided with a trough in spot -for example, in 2008 AUD/USD troughed at 0.60 in late October. However, we do not know yet if this is the peak in short positions and given the current risks in China and the market effects of the expected Fed QE tapering, there are plenty of arguments for investors to turn even more AUD bearish. Any signs of a stabilization in positioning will be very interesting, though, and should hold some information about the timing of a potential trough in the AUD/USD.

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