08.08.2008
We think that a shift in EUR/USD long-term positions is very likely when looking at recent macroeconomic data released by Eurozone countries. It seems like heavy selling of euros cannot be stopped. The latest heavy seller in EUR/USD comes in the form of a large US investment bank that was always know as a predator in the old days of direct dealing; they sport a large customer base of hedge funds and leveraged accounts, and so it seems the specs are still unloading longs on various crosses.
Custodians report seeing dollar buying across the spectrum from fixed income, equity, and overlay managers, both squaring out hedges and some fresh USD buying, and even as some techies feel the location is all wrong, these guys are voting with their feet. As we noted previously whether the ECB hikes or pauses you have to sell Euro, on a rally or on a break. The ECB have finally signaled growth is that much of a problem it cannot be ignored, it will be twice as hard next month to justify a hike as they've already told us upcoming growth data is bad.