Gonçalo Moreira, CMT
Independent Analyst
During the month of April we saw a net investment outflow of more than 100 billion euros from the euro area – which should have reduced the short positions among the speculative part of the market rather substantially.
In May – almost all of this outflow came back again – which might have been from the way the statistics are calculated. But if one sees the net flows over the 2-month period, I conclude that shorts are still the same as they were 2 months ago – and I see them as almost unchanged and substantial.
I take the view that the balance of payment components in the Euro area represent so much of euro support that dips will be small throughout the summer and I also take the view that it is only central banks that can forcefully move EURUSD lower – the ECB through asset purchases from printed euros and the Fed through higher USD interest rates.
Current Account surpluses narrowed a bit throughout May. The overall picture – as shown below – is still one of corporates and long term investors being net buyers of euros to no others expense but the speculative part of the market.
In May – almost all of this outflow came back again – which might have been from the way the statistics are calculated. But if one sees the net flows over the 2-month period, I conclude that shorts are still the same as they were 2 months ago – and I see them as almost unchanged and substantial.
I take the view that the balance of payment components in the Euro area represent so much of euro support that dips will be small throughout the summer and I also take the view that it is only central banks that can forcefully move EURUSD lower – the ECB through asset purchases from printed euros and the Fed through higher USD interest rates.
Current Account surpluses narrowed a bit throughout May. The overall picture – as shown below – is still one of corporates and long term investors being net buyers of euros to no others expense but the speculative part of the market.
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