CFTC Euro Net Short Contracts Surge By 10% Sequentially, Hit Absolute Record Of -113,890, Just Begging For Squeeze

Tyler Durden's picture

The most recent CFTC Commitment of Traders report is out, and at least as pertains to the EURUSD, it is a doozy. After hitting record after record in net short exposure, the Euro net non-commercial contracts have surged by 10% week-over-week, and represent a fifth consecutive weekly bet on the decline of the Euro, to -113,890 contracts. This is an all time record, as virtually all speculators are betting against the Euro. On the other hand, a reversal here for whatever reason would incite the mother of all short squeezes and likely push the EUR to well over 1.60 on a catalytic event. The only question is whether such a catalytic event can even possibly be conceived. We'll leave that one to the black swan hunters among you.

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dark pools of soros's picture

how about "Mermaids lead wayward Greek fisherman to massive buried stash of gold???"

dnarby's picture


Seriously though, when this squeeze happens it could present a good buying opportunity for gold.

whatsinaname's picture

They could but they would have to take a train or swim across.

Flights shut again tomorrow because of volcanic ash. Summer tourism bust ?

Invisible Hand's picture

Never hold a short position over the weekend and stop them out quickly.  A lesson I learned the hard way.  Quick in, make a little money, get out.  If I've taken a little profit and covered: result, happiness.  If I get greedy and hold the short: result, tears. The governments are stupid but they are out to get you, Mister Evil Speculator, so be nimble.

RichardENixon's picture

How true. I forgot to close out an aud/usd short last Friday night and got smoked.

Mitchman's picture

Hre come the FED, here come the FEd, here come the Fed...

Sudden Debt's picture

You know Tyler...

When people are having a party... you shouldn't spoil the fun.

What your saying is like talking about the crabs at a gangbang party. Just not done man!

sysin3's picture

Maybe they should rename it  " zeuro " .

No More Bubbles's picture

You only get a squeeze if they cover.  Eventually, the shorts win if they just hold strong........

thesapein's picture

and then the commercials going long will be taken to cleaners, right? Oh, that would be glorious.

Pelosis Usless Brain's picture

True. There are reasons for being short other than specualtion.


Leo Kolivakis's picture

When Greece receives funds next week to meet its bond payments, the Euro will rally like crazy (mostly short covering).

hedgeless_horseman's picture

Czech's in the mail?  My God, Leo, your medicine!  Don't forget to take your medicine.  Remember what happened last time? 

Ned Zeppelin's picture

Leo's right  - due May 19, and the funds will show up. But cause for a Euro rally? Possibly, as a demonstration of the reality of the EuroTARP.

That assumes no big explosions over the weekend, like Sunday night. Anything could happen, but the most likely is some ramped up response to slow the descent of the Euro due to its impact on EuroSovDebt.

So I agree - holding the short over the weekend may prove painful come Monday.

Leo Kolivakis's picture

Thanks Ned, I expect some short covering rally in the Euro, then it will proceed towards parity.

Double down's picture

"Well played Leo, your journalistic professionalism shows through, and now over to Maria Bartiromo for the weather"

andrewunknown's picture

What is it about the 05/19 disbursement that would induce the EUR to rally?  I'm not so presumptuous as to claim it couldn't happen, but fail to recognize how this will coax some latent source of demand out of the shadows.  As you said, the funds will show up.  If anything, I think the response would be net negative: at least from where I'm sitting, May 19 is the tangible beginning of the unfolding collective realization that the EU has indeed started down a very dark road. 

nicktd's picture

easy.... berneke anounces our facists brothers in europe need help to monetize PIIGS bonds with dollar toliet paper!!

Sudden Debt's picture

facists?... you know... reading a book once a while never killed anybody. Maybe you should try that once, and I'm not talking about the manual of the microwave.


tmosley's picture

Reading a book isn't going to help you learn to spell "fascist".  

And misspelling a word is not indicative of intelligence, you jackass.

Sudden Debt's picture

Your a idiot to think fascists still exist in Europe MORON!

By even responding, you prove to be a lowlife Racist Redneck inbreed Motherfucker.


tmosley's picture

I possess an idiot?  Methinks you should attend to your own mind before pointing out the deficiencies you perceive in the minds of others.


DoChenRollingBearing's picture

I believe Sudden Debt is FROM Europe.  And so may be posting in his (her) non-native language.

Misunderstandings are common when speaking a language other than your own.  You should see the looks I get sometimes in Europe when I speak my badly fractured Italian or French.

So lighten up on Sudden Debt, whose observations from the European Theatre I find of great value.

Disclosure: I did not run into any fascists in our last trip to Italy.

tmosley's picture

I'm not quite sure why I am the one that needs to lighten up.  He is the one shooting his mouth off acting like a child that had his lolly taken from him.

If he doesn't understand what a fascist is, that's his problem.  This last bailout has proved definitively that Europe is run by those who seek to merge governent and corporate power, the very definition of fascism.  They might not be slaughtering Jews this time around (yet), but their economic and social policies are the same.

Sudden Debt's picture

Sorry for the insults. He's right.

The word fascist comes pretty hard here, same thing for Nazi's. By saying that these idiologies still exist as a average society comes pretty hard if you know that we where actually supressed by them.

It would be almost the same if we would be calling Americans Communists.

We both are western people, and shouldn't call each other names. Our two societies are the best on this planet. Some thing are better in your country, some things are better in mine. And for the moment, both are countries are in a mess. 

So: sorry for the name calling Mosley, I shouldn't have done that.

tmosley's picture

Thank you.

To be fair, America is more fascist than Europe.  The entirety of the western world has been usurped by these people.  It's sickening.

nicktd's picture

Wow! I generated my first controversial thread!

And why people make fun of microwave oven manuals i have no idea. They are a better read than FRNYB paper on currency swap program. Borring!


desgust's picture

The Governments are FASCIST, not the people. Yes, I'm European and I don't want an euro in Germany! No, I don't respect Merkel. Yes, last year Americans loved Merkel! She's a neo-con, scum, friend of Bush and globalists. And yes, we hate the EU and we reject it but we have no guns like you do. BTW your government is also fascist and you have GUNS!


FreeStateYank's picture

And Europeans loved Zero. Just goes to show how easy it is to fool people. As a yank, I've watched the Feds periodically make noises about guns. Here, that just sends a wind up the britches of the public and they go out and buy more guns and ammo. It's been a standoff.


Lately, gun rulings appear to be tilting to those who support the 2nd Amendment, thankfully. Bit surprised clever Europeans haven't just made their own. Besides defense, helps to put food on the table. Faster and more effective than snares!

Mitchman's picture

On a serious note, I have a query:  If they sqeeze the shorts, aren't TPTB crushing the very same banks they just spent $1 trillion bailing out?

Mitchman's picture

I am assuming that the guys holding the short positions are the TBTF banks and that in a rally situation where the PTB go and buy up euros in the market to firm the price the shorts are going to have to cover and lose a bunch of money in the process.  I am obviously a rookie at this and just trying to uindersatnd.  Thanks for the help.

buzzsaw99's picture

You aren't wrong. [/double negative]

Mitchman's picture

I love it when people say "I don't disagree with you".  :-)

IE's picture

That's just nuance.  It does have a different meaning than "I agree with you".  With the double negative, there is an implied, "but..." ... or some other caveat or context.

bulldung's picture

Thank you hedge grammarian.

Greater Fool's picture

The question is why the banks are short. If they're hedging USD liabilities to keep from bleeding to death out that side of their balance sheets, then they can't really be "squeezed"; even if the EUR turns around, they don't feel it in PL terms.

I also am no FX pro, so I suppose it could be that a lot of these positions are speculative froth, and you would get a squeeze if the currency turns around. But the market is huge, and extremely large amounts of it are real-money hedging and government monetary policy, which will not change course as quickly as speculators will.

thesapein's picture

It was a trick question, by accident maybe, wasn't it? Non-commercials are mostly shorting the Euro right now. Commercials are long, going down with the ship.

Mitchman's picture

Dear All,

Not a trick question.  Just asking out of overly demonstrated ignorance.  I love this blog.  It is great to read the musings of such wonderful minds.  Thank you all very much.  I will stay close to the Blackberry waiting for that one special news bulletin.  It is guaranteed to be interesting.  Thanks very much again.

thesapein's picture

I'm only attempting a response so that I can be corrected if wrong.

TBTF banks you are referring to are typically considered part of the commercials. Tyler's graph shows the short positions for non-commercials. Thus, TBTF would be represented by a mirror curve showing the commercial longs. So I think you got it kind of backwards, no?



Sudden Debt's picture

I don't think European banks would bet against the Euro knowing they all got bailed out.

The EU would fry them if that ever came out.

Same for the dollar. What if the dollar would drop 20% because citibank or bank of america shorted it to death? The gov. would break them up as a pressent.

I think...

IE's picture

I believe Tyler posted an article saying that is exactly what the European banks are doing.  The premise is moral hazard.

Panafrican Funktron Robot's picture

Depends on the net change in currency and bond holdings.

I have a viewpoint that Monday is actually going to see another substantial leg down, possibly even breaking 1.20.  The incentives and ammo to break through a squeeze are there.  I ultimately see this even breaking through parity.  Everyone will run around like chickens with their heads cut off at this "unprecedented" event (that happened not even a decade ago). 


Abundance's picture

Go long the Euro.

Sudden Debt's picture

Not before it gets back above 1.25

Headbanger's picture

And what does that mean for gold and silver Tyler? Would gold/silver plunge with a rebounding Euro or would the falling dollar prevent it?

Panafrican Funktron Robot's picture

As far as commodities charting, gold and silver are going to do whatever JPM wants them to do.  Fortunately, physical gold is a good buy at any price.

Janice's picture

Not Tyler, but gold was about $1,000 9/2009....before the Euro crisis.