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The Collapse In EUR Spec Longs Ends As Dollar Short Covering Has A Little More To Go

Tyler Durden's picture




 

As we predicted last week, the tide has turned in the futures market, where after 4 weeks of steep declines, the net EUR non-commercial specs have finally posted a pick up. And considering they are delayed by about 700 pips, after the pair has surged since May 23, expect what will likely be the biggest surge in net long EUR exposure next week. In the week ended May 31, there were 21,970 net longs, compared to 19.129 in the week prior, and 99,516 on May 3, when the EURUSD was flirting with the 1.50 mark. We expect a pick up of at least 30-40k contracts in the next week as all latecomer shorts promptly cover. Elsewhere, the short covering spree in the USD continues but not for long: look for the most recent net long exposure of 4,787 to promptly flip and go negative once again as more and more begin anticipating another Monetary Easing episode. And out east, the net JPY exposure went bearish fror the first time sine May 3, with net exposure dropping from 8,006 contracts to -1,648. The technicals at this point indicate a break of recent EURUSD resistance in the 1.50 area is very much possible.

 

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Fri, 06/03/2011 - 16:07 | 1337389 I only kill chi...
I only kill chickens and wheat's picture

Things will break.

Fri, 06/03/2011 - 16:11 | 1337414 IdioTsincracY
IdioTsincracY's picture

Let's see what's on the table:

tax cuts for the rich ..... check

'free' repatriation of offshore capital ...... check

benefits cuts for the masses ....... check

less regulation on what we do ...... check

So.. all we need is a little nudge ...... break the thing then!!

 

Brought to you courtesy of the Oligs!!

Fri, 06/03/2011 - 16:13 | 1337421 JailBank
JailBank's picture

Time for the plebes to ensure they are fully armed.

Fri, 06/03/2011 - 17:31 | 1337649 Highrev
Highrev's picture

Dollar down, stocks down . . . again.

 

Fri, 06/03/2011 - 16:11 | 1337395 Deep
Deep's picture

where is Robotroll?

Fri, 06/03/2011 - 16:13 | 1337403 slow_roast
slow_roast's picture

Furiously hunting for a chart of some shitty company that went up despite everything else being down.  His disappearance will be cheered by many.

Fri, 06/03/2011 - 16:38 | 1337487 Quinvarius
Quinvarius's picture

Whoever junked that is crazed.

Fri, 06/03/2011 - 16:39 | 1337497 augie
augie's picture

Hate to point this out but GS is up on the day.

Fri, 06/03/2011 - 16:10 | 1337409 camaro68ss
camaro68ss's picture

Robo got smart and is now digging silver out of the ground for $5

Fri, 06/03/2011 - 16:18 | 1337429 Land of the Ris...
Land of the Rising Sun's picture

+1

Fri, 06/03/2011 - 16:43 | 1337503 plocequ1
plocequ1's picture

Hes on junk patrol

Fri, 06/03/2011 - 20:11 | 1338115 Hulk
Hulk's picture

Robo's formula failed him today. It will take him a few 24/7's to come up with a new formula...

Fri, 06/03/2011 - 16:10 | 1337405 HpDeskjet
HpDeskjet's picture

So... Europe is falling apart although it has been postponed a few days (at least a weekend), Trichet can only raise rates if he wants to kill Spain with its variable mortgages, US is stopping QE and EURUSD rallies... WHATEVER

Fri, 06/03/2011 - 16:12 | 1337418 IdioTsincracY
IdioTsincracY's picture

my point exactly ....

feel the power of the squid!!

Fri, 06/03/2011 - 16:10 | 1337413 slow_roast
slow_roast's picture

But GM is buying stock off the US government; surely that means things are great.

Fri, 06/03/2011 - 16:14 | 1337424 rabidbat
rabidbat's picture

No, EURUSD is going down starting monday. Back to 1.20.

Fri, 06/03/2011 - 17:58 | 1337726 GeneMarchbanks
GeneMarchbanks's picture

Sure it will after it hits onefiddy

Fri, 06/03/2011 - 19:23 | 1337986 Yen Cross
Yen Cross's picture

  There are barrier, digital, options @ 1.50. That bad boy is going to take the 1.55 area.

    The ECB and REAL money will start covering as exports soften going into Fall ( Northern Hemisphere).

Fri, 06/03/2011 - 16:21 | 1337450 citta vritti
citta vritti's picture

 

 

Is it a measure of prospective Euro weakness or strength that ECB executive committee member and likely Trichet successor Lorenzo Bini Smaghi writes in FT to the effect that because higher prices for formerly volatile food and energy prices are no longer volatile but here to stay, that is, no longer transitory, “core inflation is no longer a very useful indicator for monetary policy, and should probably be abandoned.” Link here (I hope): http://www.ft.com/intl/cms/s/0/d8b5ee4c-8c81-11e0-883f-00144feab49a.html...

 

 

Fri, 06/03/2011 - 16:27 | 1337470 TexDenim
TexDenim's picture

"Elsewhere, the short covering spree in the USD continues but not for long: look for the most recent net long exposure of 4,787 to promptly flip and go negative once again as more and more begin anticipating another Monetary Easing episode."

So very true. There is going to be a real test for Zimbabwe Ben. All have assumed QE3 is out of the question -- but now his reputation is on the line, and if things start to go to sh-t, will he REALLY stick to his guns? Or will he give in a pull out the synringe of morphine for a third shot of JoyJuice for Wall Street? I used to think QE3 was out of the question......but, we'll see, won't we?

 

Fri, 06/03/2011 - 16:41 | 1337494 css1971
css1971's picture

Well. It's either that or all the money vanishes in a puff of credit/debt anhiliation. The question is when.

A year ago, I thought there might be another couple of years in it. 2013 or so peak in the markets but looks to me like it's all gonig pear shaped now.

Fri, 06/03/2011 - 18:40 | 1337867 TexDenim
TexDenim's picture

Yes indeed -- pear shaped, just like a fat banker's waist line.

Fri, 06/03/2011 - 16:43 | 1337499 IdioTsincracY
IdioTsincracY's picture

You know .... dual mandate .... unemployment going up .... QE3 could happen no problem....

still ... they do need to raise rates at this point ....

however, the wild card remains the consumers .... more so than Rating Agencies, Speculators, and Bond investors ...

Fri, 06/03/2011 - 16:40 | 1337506 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Cash is King!  King Rahrah!!!!

Fri, 06/03/2011 - 16:52 | 1337536 Jack Sheet
Jack Sheet's picture

I'm just ignorant but curious - do people exist that make money in the foreign exchange markets? Like betting $100000 at 100 to 1 leverage and get rich/get shafted when the EURUSD moves by 1 cent? Sounds like a friggin' casino operation to me.

Fri, 06/03/2011 - 17:30 | 1337647 fswalker
fswalker's picture

Leverage is irrelevant when you apply correct money management tools. What difference does is make if im levereged 50:1, 100:1 or 400:1 if my overall risk per trade doesnt exceed a few percent??? Being the most liquid market in the world (spot not futures) it also provides added protection for positions of most sizes. While it resembles a casino op, alongside most zero sum activities, in this game card counting isnt frowned upon ;)   

Fri, 06/03/2011 - 18:05 | 1337741 Foul Ole Ron
Foul Ole Ron's picture

Once you work out your risk management and figure out what sort of things are driving the market it's not so bad. I make on avg about +3.5% per week increase on my account balance. The hard part isn't the trading but wrestling with your head - it'll try to trip you up and play all sorts of games with you. My first live account though I tripled it in 3 weeks and then blew 90% of it on just 2 trades - if you don't manage your risk and your head you can get shafted very quickly.

Fri, 06/03/2011 - 16:54 | 1337542 zaknick
zaknick's picture

Spanish TV is all hopey changey over the banksters' minions who "won" (by default) the recent elections. No coverage whatsoever of the people in
Puerta del Sol. It's like a whole country muzzled and held hostage. WTF

Fri, 06/03/2011 - 17:16 | 1337594 slewie the pi-rat
slewie the pi-rat's picture

blythe is driving me craaaazeee!  i know, what else is new?  i thought she might be outa the silver business.  all her customers' silver was getting delivered.  and then some.  so, she moved the silver into registered, as per the delivery notices.  jpmorgue silver inventory.  see?  DJ Comex Gold And Silver Warehouse Stocks-Jun 2

it had been like this:  DJ Comex Gold And Silver Warehouse Stocks - May 31

now, it's baaaaaack!:  DJ Comex Gold And Silver Warehouse Stocks - Jun 3

amazing!  i'm sure there is some logical explanation, which no one will ever hear, from her  lips.  whatawoman! 

Fri, 06/03/2011 - 17:21 | 1337622 vocational tainee
vocational tainee's picture

It`s now some 65 years ago,that i had to listen to fairy tails.All along the way I had to learn it most of the time by the hard one. My advice ,bring in your harvest in a sustainable way.Ie gold and silver.

Fri, 06/03/2011 - 17:45 | 1337678 Franken_Stein
Franken_Stein's picture
Ex-Wachovia Manager Tribby Gets Seven-Year Term for Stealing $14.1 Million

http://www.bloomberg.com/news/2011-06-03/ex-wachovia-manager-tribby-gets...

 

Republican Ron Paul Dismisses Boehner’s Dollar-for-Dollar Debt-Cut Demand

 

“Just think of the difference on the attitude of the people now about the Federal Reserve,” Paul said, noting that Fed Chairman Ben Bernanke took the unprecedented step April 27 of holding a news conference to defend his policies. “It’s a failed system, and people are starting to realize this.

 

http://www.bloomberg.com/news/2011-06-03/ron-paul-dismisses-boehner-s-do...

 

Fri, 06/03/2011 - 17:50 | 1337688 fiddler_on_the_roof
fiddler_on_the_roof's picture

Gold up, dollar down, stocks down for past week- are we entering a new world ?I think Gold is due for a pump and dump just like silver went thru. Disclosure : long physical Gold for many years.

Fri, 06/03/2011 - 18:09 | 1337732 Yen Cross
Yen Cross's picture

  How does 1.55 eur/usd and 76 usd/jpy sound? Assuming a continued soft dollar policy.

 

    Ref; QE status quo.

Fri, 06/03/2011 - 18:19 | 1337786 JonTurk
JonTurk's picture

Tyler will again be wrong with his 1.50 breakout call as like when he called 1:1 at 1.20 bottom last year.

Tyler you always get it wrong dude, EURUSD is a wide ranging market, it is not trending like commodities and equity indices and it has nothing to do with the COT and sentiment stats. all it is related to is the medium term cycle structure.. we are now flirting with the top of the range and odds are pretty high that 1.4940 was the medium term top.

aside from breaking out 1.50, it would not even see 1.48 again for long months..

good luck to you dude

Fri, 06/03/2011 - 19:40 | 1338022 Itsalie
Itsalie's picture

Lets see, stocks down, bonds up, toilet paper down euro surge. Silver and gold up. So the famous risk on-risk off trade has changed character or we need to coin a new word for this new phenomenon? Euro and PM are now correlated to Bonds but not stocks? Is this risk-on or risk off? Or some bastard child?

Fri, 06/03/2011 - 19:48 | 1338041 Yen Cross
Yen Cross's picture

  What do you readers think about the correlation breakdown this week in silver (xag) vs gold (xau)?

Sat, 06/04/2011 - 00:55 | 1338767 hungarianboy
hungarianboy's picture

Hi all, I'm new here. and thanks ZH for giving me access.

I'm from Europe and to be honest, it isn't that bad over here as some think. I expect EUR/JPY to make a surge to the upside soon together with all other EUR crosses.

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