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EUR Shorts Get Obliterated Just As They Reach 6 Month High
Last week's surge in net commercial EUR short positions to -45,182, nearly a double from the -24,201 the week before, explains why the last few days have seen one of the sharpest and most pronounced upward moves in the EUR(USD) in recent history. All a historic short squeeze needed was a little gratuitous systemic backstop like the Chinese rhetoric about bond purchases, and a proximal catalyst such as the Goldman "tactical" upgrade of the EURUSD and the avalanche of shorts, which was at the highest it has been in over half a year, rushed like headless chickens and completely chaotically in traditional groupthink unwind fashion out of the burning theater entrance. And what certainly "helped" the EURUSD trade unwind was the massive jump in bullish USD positions from -1,268 net to 10,057. That said, next week we expect the inverse, as EUR shorts plunge, and USD shorts surge, only to be taken advantage of at the first possible opportunity by far bigger and sophisticated institution, and not to mention, countries, which have $700 billion in FX reserves in a currency that needs to be sustained at about 1.35.
Looking elsewhere, we see that realm of treasurys, while not nearly as exuberant as it has been in the past, the speculative interest certainly is coming back, especially in the belly of the curve, at the 5 Year point, where the net long interest was roughly equal to the highest recorded in the past year. Seeing how these exposures simply bet to be blown up, we are confident that the 5 year part of the curve will see material weakness as the yield jumps to take advantage of speculative unwinds. On the two other sides, both the 2 and 10 Year net specs were at relatively low positions, and thus it is likely that there may well be a run up in the prices of both to get more spec in on board, in anticipation of another kill.
Lastly, looking at selected food commodities, the net long exuberance is at an all time high, leading to a high risk of a quick unwind should the agribubble pop at some point.
For those seeking additional information, below is Libanman Futures' extended options report - link.
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So China covered (with the bail out monies?)... and cleaned up... 3 ways? JP must be pissed.
... and PMs sold off (again) to cover Euro short positions.
+1
A: Hu (President Hu of China) says hello to Euro shorts!!!
B: Who says it?
A: Hu says it.
B: Who?
A: Hu.
B: WTF??!!
LOL....Hu's on first, hehe.
OT: Egypt activists hope Tunisia revolt sparks change
http://www.foxnews.com/world/2011/01/14/egypt-activists-hope-tunisia-rev...
Next huge trade is to short DBA.
I hope you're right. Take it down into the 20's and I'd want to be a buyer for the LT.
zeitgeist coming tomorrow!
Definitely worth it =)
http://www.zeitgeistmovie.com/
As I mentioned in an earlier post , this whole move was likely one monster stop run . If euro bulls i.e Asian central banks , want to maintain this momentum they're on their own from here on in .
Bravo! A world-class flushing.
told ya sow :)
China getting into eurobonds was a pretty high pressure on the dollar.
Can't wait to see equity longs rushing for the door.
They may need $1.35 but they cant hold that line, temporary spikes notwithstanding.
Gold has now cracked in all currencies..
The "Fear Trade" might be over.
http://stockcharts.com/freecharts/candleglance.html?$GOLD:FXE,$GOLD:FXY,$GOLD:FXC,$GOLD:FXS,$GOLD:FXA,$GOLD:FXM,$GOLD:FXB,$GOLD:FXF|D
get your cocoa on!
Japan buying Euro bonds shows how ridiculous the whole financial system is.
Higher yields backstopped by the ECB?
The 38.2% retracement from the June low the November high is 1.33624. The price moved passed it for a short period but settled back again. For the last few days the euro has been hugging this level very closely.
I unloaded EUO Jan7/10 when I heard about the Chinese PM assuring Spain that everything's going to be AOK on Jan 6 in the Globe & Mail.
Figuring out how the bastards are going to cheat is really hard work.
http://www.theglobeandmail.com/report-on-business/economy/greek-pm-sees-rising-support-for-euro-bonds/article1859528/?cmpid=rss1&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+TheGlobeAndMail-Front+(The+Globe+and+Mail+-+Latest+News)
Typically the commercial's are the producers or hedgers. The real numbers to watch are the non-commercial's, which are the hedge funds. If the commercial's are getting short, the other side (hedge funds), are getting long.
Tyler is the new Fleckenstein.....years ahead......this site will bust you out with their genius
I think the chinese threshold is closer to 1.2 than 1.3, because 1.189 was the lowest level reached during the depth of the Greek crisis in June 2010 before the euro made a dramatic U-turn and that was when Merkel (end of May 2010) and Sarko (end April 2010) made separate kowtow trips to see Hu in Beijing in the midst of Greek tragedy.Merkel wanted to meet Liu Xiabo but had to contend with bishop Jin in Shanghai and Sarko cancelled the dalai's meeting as quid pro-quo for chinese support.
The chinese have done their sums, below 1.15, eastern european and even Italian-made textiles and shoes become a real threat to the chinese textile/shoe manufacturers of Wenzhou, always a strong lobby group in the politburo. Remember that the chinese have let wages go up an average of 20% since then, their costs have risen an average of 10% since the Merkel/Sarko kowtow trips. They are infintely more sensitive to their manufacturers' competitiveness than the fair market value of their reserves, otherwise they would have intervened much earlier to stop the euro plunge all the way from 1.5 to 1.2. Ditto the Japs, their pain threshold is close to the chinese, because they, the koreans and other asian exporters have been quietly pegging to the RMB as well.
Thanks for the observation. Interesting.
:D
It's almost like they're trying to to punish investors, err gamblers, that are using fundamentals.
It's odd that a weak euro is bad and a strong dollar is good. Can even let that happen for a moment. Oh the horror of commodity prices coming down.
Seems like a push to drive down the dollar no matter how many bailouts and defaults Europe has just to keep equities here up.
But wouldn't a weaker euro be best for them to grow out of their mess? All the austerity won't let the economy rise.
it seems you haven't been paying attention to this entire market the past few months. it has all been last minute stick saves in speed lines or trend channels in the nyse, just when you'd be loaded up with shorts.
the emerging markets have been range trading with lower highs,
the only thing keeping world markets up from further correction is the relentless stupid manipulatedmarch of the s and P, while every other market in the world has undergone some kind of correction.
It's all been about short squeezes to prvent bigger drops, etc. I don't mind this bacause after watching it for a while it is very easy to trade with the trend lines (of course writing this they will change tactics)
so I have been riding doollr index and dollar bear up and down making very good profits on a trading range.
the powers that be know from last year that world markets depend on the euro. they can continue to go up if the euro is range bound.
otherwise they drop. so what do you think they are going to do and why do you think brian stakc was talking with the goldman fx desk
"...so what do you think they are going to do..."
They can't do anything. Now, we find out that the All-Powerful Fed ain't so much...