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16 Mar 2015
Positioning unveils further downside on the cards for EUR – Danske Bank
FXStreet (Edinburgh) - Morten Helt, Senior Analyst at Danske Bank, assessed the recent EUR positioning report.
Key Quotes
“IMM positioning data released Friday revealed that while investors added to their speculative bearish EUR positions in absolute terms, non-commercial positioning measured as percentage of open interest actually became less negative”.
“While this at first may seem contradictory, the reason is that the denominator in the fraction ‘percentage-ofopen interest’ also includes commercial positions (i.e. hedges), which are at a historically high level”.
“In fact, an important argument related to our expectation of a lower EUR/USD in the coming months is related to the high EUR exposure hedge ratios: when EUR denominated assets rise, more EUR selling is required to compensate for the higher share of euro assets in the portfolio, which in turn will drive more EUR weakness”.
Key Quotes
“IMM positioning data released Friday revealed that while investors added to their speculative bearish EUR positions in absolute terms, non-commercial positioning measured as percentage of open interest actually became less negative”.
“While this at first may seem contradictory, the reason is that the denominator in the fraction ‘percentage-ofopen interest’ also includes commercial positions (i.e. hedges), which are at a historically high level”.
“In fact, an important argument related to our expectation of a lower EUR/USD in the coming months is related to the high EUR exposure hedge ratios: when EUR denominated assets rise, more EUR selling is required to compensate for the higher share of euro assets in the portfolio, which in turn will drive more EUR weakness”.