IMM positioning

In July I noted how shorts were continuing to increase in all but the cable and swissy. The latest report shows a different story with the aggregate USD long position decreasing by 5.3bln in the past week. Most of this was thru EUR and JPY short covering which given the extreme shorts prior is no surprise, especially since a Sept rate hike is decreasing in probability. Most other currencies decreased net shorts as well but not hugely. If one looks at euro which hit a high of 1.1713 and Yen dropping under 117 this week then this has played out nicely with some help of equities and one would think the decreasing short posions have probably continued into this week.

I still favour parity for the Euro but will remain cautious for the time being whilst the rout in equities continues and perhaps a little more positive reinforcement for the US rate hike, which with global growth slowing might even be pushed out to 2016.

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