The Power of Positioning :
The finger may be in the Greek dam , but it was the sheer weight of shorts that caused the Euro to close very strongly last Friday . With the central banks virtually absent from the market place , the Euro powered north and technically it remains bid with a target at 1.4900. Regardless , it just does not feel right to be anything but negative on the medium term future of Europe.
Themes
QE3 is back in the press.
Trichet on Thursday – can his rhetoric be any more hawkish ?
Commodities are rallying but for how long ?
Positions / Views :
Today
– with the market still short eurusd there is still more room to the top side with a few weak stops lurking around 1.4700.
– aud/usd trades bid into tomorrow’s RBA but the market will look to sell the rally at 1.0820+50.
– the flow last week from the real money and leveraged community points to a lower nok/sek . If oil slips then this trade will gather momentum.
– no chance of the MPC hiking so the pound will remain under pressure.
Core
– remain long the Swiss Franc ahead of tomorrow’s CPI data.
– macro bearish the Yen but it’s a chore of a trade.
– positioning is light into a week of heavy data and potential market moving headlines.
UBS Investment Bank