Goldman On The EUR Long/USD Short Rout

Tyler Durden's picture

A week ago, when we looked at the CFTC's Commitment of Trader data (for speculative exposure), we noticed that EUR long spec positions surged to multi-year highs. We said: "As a result of this surge in exposure, we have seen a one way trade as the specs exit the trade en masse." Sure enough, a week later, the EURUSD (and other EUR crosses) continues to tumble and appears poised to take out the 1.40 level. Today, Goldman's FX team led by Thomas Stolper who appears will not disappoint once again and will be closed out on his EURUSD trade at a loss, looks at the COT data and extrapolates the same rout in EUR longs we predicted, as well as a large $ short position. Of course, this is what we said on Friday, with the caveat that the marginal move has already been completed "and from this point on it will be just the retails, the momos and the
robots" if the EUR is to continue dropping.

From Goldman:

This report reflects positioning as of Tuesday, May 10, and therefore (as always) only offers part of the story of the positioning unwind underway this week. Nonetheless, the limited data available do tell a story of a significant unwind in the IMM $ short position, which if extrapolated to the remainder of the week, paints a fairly dramatic picture.

Our proprietary GS aggregate $ positioning score, which factors rate differentials into positioning, went from a score of -8.1 as of May 3 (in the run-up to the ECB press conference) to -6.8 as of May 10, a sizeable correction that is likely to have continued at a similar pace for the remainder of the week. The main driver of this correction was the EUR/$, where our positioning score fell to 6.9 long EUR from 9.2. We recorded similar corrections for other currencies against USD, notably AUD (positioning score from 5.0 last week to 3.1 this week) and CAD (positioning score from 4.8 last week to 1.9). There were only two outliers to this correction, $/JPY and NZD/$. In both of these, positioning moved slightly against USD through May 10 (from -9.1 to -0.1 for JPY and from -2.5 to -0.9 for NZD), and in the case of NZD, remains low relative to its history.

This positioning report – due to its lag – understates the correction in $ short positioning that is likely to have occurred this week. For example, just extrapolating the pace of the correction in EUR/$ forward to the remainder of the week, our EUR/$ positioning score is likely to have fallen by at least as much again (giving it a 4 handle from the 6.9 reading as of May 10). This suggests that the correction in $ shorts by the end of the week is likely to have been significant.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Franken_Stein's picture


And what's even worse is that Jan Hatzius is German.

Maybe I should ask this guy some serious questions like this:


Was soll die Scheiße da bei Goldmann ?

Wie kann man mit solchen jüdischen Betrügern zusammenarbeiten und dann auch noch deren Chefökonom / Chefvolkswirt werden und permanent diese vollkommen überzogen optimistischen und damit irreführenden Marktprognosen raushauen ?


Das ist Hochverrat und Betrug !


Komm du mal nach Deutschland zurück, du Hund, und wir werden dich dafür knallhart zur Rechenschaft ziehen, Kollege !

Du Besser-Wessi.


WmMcK's picture

High reason and fraud, indeed.  I hope he gets what he deserves.

falak pema's picture

thats sounds too sophisticated for a US economist, unless he has an education in quant probabilistic models they teach in Europe. ...Ein bilder bunder baschein wanschen fuller klinder kleiner nein kusheinder fallen...

PY-129-20's picture

haha - that was funny. Wirklich witzig.
Vous êtes un comédien, Falak. Maintenant, je l' essaye!

GOOGLE traduit:

"Une image plus complète fédérale baschein Wanscher Klinder automne pas moins kusheinder ..."

Ey, tu connais elle? Mais elle connaît Monsieur Strauss...

dcb's picture

I expect it to go to the speed line or the bobbom of trend. because all trading is electronic so just as it was pushed too hihg, it will of couse be pushed too low. lthough, I did enter friday with my initial stop point, I think it will go lower.

Glasgow Gary's picture

Exactly. Retail positively aches to get long the USD. Take a tour of the internet, especially the deflationists and econo bloggers, and you'll find that one of the most popular ways to get "contrarian" is to be long the USD. The trade idea has been all over my streams since 2008. And it's an idea that's adopted by the most consistently wrong TV guys as well. I really disagree that bearish sentiment on the USD has been high. Not in the trading community it hasn't. Maybe the long EUR trade got overblown. But the global market cares little for the USD.

The traders dream, dream , dream of a huge USD rally. They will chase last week's move into the next 48 hours, and then get mowed down by EU and IMF and FED actions--and talk by Tuesday night.

SwingForce's picture

Das ist Hochverrat !

I've been known to say that too.

longorshort's picture

Anyone know how often this data from goldman comes out?  If it is just data from their Ready platform, the whole currency market, or just goldman's trades?  How do you subscribe to get this data?  Anyone have a contact?  It would be nice to see currency positioning data.

espirit's picture

Goldman gives gold a bad name, but they called 1.50 Euro on a 1.495.  Got to throw the sheeples a bone every once in a while to keep them interested, but I wouldn't let them manage my kids piggy bank.  

Grand Supercycle's picture

EURUSD downtrend is gaining momentum as overdue USD rally I forecast develops.

It took longer than expected but we got there eventually.

Stocks and GOLD/SILVER will fall imo.