Speculators scaled back on short EUR contracts and the JPY net speculative position turned short
The IMM data for the period 22-28 Feb revealed:
* The net short speculative EUR position decreased significantly as speculators once again scaled back on their short contracts.
* JPY continued to see negative sentiment as the net speculative position switched from long to short for the first time since end of May 2011. The move was driven both by added short and reduced long contracts, speculative presence is thus still very high.
* Continued scale back of short speculative GBP contracts as cable stays strong.
* AUD net long speculative position increased yet again, but speculators view of AUD is more at odds than the net position indicates as both short contracts and long contracts were added.
* The net long speculative NZD position fell back from its close to record long net positions (probably driven by profit taking).
* CAD continued to see an increased net long position but price action was modest. Stay cautions as USD/CAD has not fallen as much as the positive sentiment suggest. A higher USD/CAD could thus trigger buy-stops, rendering an acceleration.
* The general effect of the positional changes was a large decrease in the net long speculative USD position which is now just above its 52 week mean.
FX-O-meter indicators:
* This week the O-meter indicators signal (for details see page 5):
* Exit long EUR/JPY and Exit short USD/NOK
* The strongest trends
* USD/JPY up, EUR/JPY up and NOK/SEK up
* The biggest stretches
* EUR/NOK down, USD/JPY up and NOK/SEK up
* A signal for higher EUR/NOK: EUR/NOK has managed to stay stretched longer than what is usual for a stretched currency pair. One explanation may be that its short-term fair value (as measured by a multi-factor model) has trended down alongside EUR/NOK. However, as spot this morning breached the models lower signal level at 7.40 a signal for a correction higher to take place was generated.
Click here to read the full report: Speculative Position 03.05.12
SEB tech team