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Speculative investors add to long EUR positions

Tue, Apr 14 2009, 14:52 GMT
by Kasper Kirkegaard

Danske Bank A/S

• The latest IMM data covers the week from 31 March to 7 April
• After having turned net long in EUR, by late March, speculative investors added to net long EUR positions last week. Bets that EUR/USD will appreciate was build further, despite EUR/USD failing to break above its March high and despite the pair falling back towards 1.32 by the time the IMM data was collected. Net long EUR positions are still fairly modest by historical standards though.
• Speculative investors continue to reduce net long USD positions, which nevertheless remain significant. The effective USD index is currently trading 5 percent below its 9 March multi-year high.
• The Australian dollar remains in favour by speculative investors. Net long AUD positions were extended in the week to 7 April and are now back at levels not seen since August last year. The AUD has been one of the best performing G10 currencies this year and has gained a stunning 16 percent against USD during the past month. While the AUD continues to see strong support from the pick up in risk sentiment, rising commodity prices and a widening interest rate spread, the build up in long AUD positions does increase the risk of a correction as the trade has become more crowded.
• Despite GBP/USD continuing to climb higher, breaking back above 1.45, speculative investors have added to net short GBP positions. Hence, investors are not yet convinced that the pressure is off Sterling. This view is also reflected in pricing on the option market, where GBP/USD risk reversals remain negative.
• Speculative investors are net long in AUD, EUR, and now also NZD against USD, while net short in GBP, CAD, JPY and CHF against.

• Download full IMM Positioning with charts

Published on  Tue, Apr 14 2009, 14:57 GMT