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Moving Out Of GBP And Into EUR Ahead Of Draghi And Carney‏

ByDanske Markets
Published 02/11/2013, 06:00 AM
Updated 05/14/2017, 06:45 AM
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Adding to net long EUR positions ahead of ECB meeting:

The latest IMM data covers the week before last week's ECB meeting when EUR/USD traded as high as 1.37 on expectations that Draghi would sound upbeat. However, Draghi surprised the market in his statement by mentioning that the euro exchange rate was a downside risk to inflation and indirectly hinted at the euro when speaking of downside risks to growth. Considering that net long speculative EUR/USD jumped 3.5pp to 15.1% in the week ahead of the ECB meeting, the risk of a further correction in the euro should not be ignored.

The hearing of the incoming Bank of England governor Mark Carney was the main event for sterling traders. Unlike the ECB, Carney turned out to be less dovish than expected and the move lower in EUR/GBP seemed justified as traders had fully squared out net long GBP positions ahead of the hearing, making room for new longs to be added. The speculative positioning in GBP is now neutral.

CAD no longer an investor favourite: One of the biggest changes in positioning was once again seen in CAD where net long positions were scaled back from 24.2% to 19.6% of open interest. Similar to last week, the move is probably a reflection of the reduced need for alternative safe havens after the euro recovery and the softer-than-expected news from the Bank of Canada in January.

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