Intraday Market Thoughts

Onto Euro positioning

by Adam Button
Dec 14, 2020 14:40

Another Brexit deadline was missed on Sunday but the FX market is taking it ats good news that talks will continue anyway. In the US, stimulus talks dragged through the weekend as well with some positive signs but no deal. CFTC positioning data showed fresh bets on the euro. Below is the latest charts breakdown of EURUSD futures speculative positioning in terms of net longs (longs minus shorts) and gross longs and gross shorts. Note how gross and net longs are well below their highs, while gross shorts face a persistent trend of lower highs.

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Onto Euro positioning - Eur Net Longs Dec 14 2020 (Chart 1)

Both EU and UK camps in Brexit talks promised that Sunday was a 'firm' deadline but evidently it wasn't. As the deadline passed, the leaders issued a joint statement that was almost apologetic.

“Despite the exhaustion after almost a year of negotiations, despite the fact that deadlines have been missed over and over we think it is responsible at this point to go the extra mile,” the statement said.

Extending the talks showed that the leaders see some chance of a path forward and cable rose as much as 150 pips before paring one-third of the gains. The only real deadline we have is December 31 but there are already signs of supermarkets stockpiling food and other real-world worries.

In the US, A bipartisan group of senators will unveil a full $908B relief bill on Monday. It's not likely to be supported by congressional leadership but it could form the backbone of a broader compromise to go along with a bill to fund the government at the end of the week.

The drama around both deals and the FOMC is likely to steer the mood in markets this week – which is the final full trading week of the year.

CFTC Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR +156K vs +140K prior

GBP +6K vs -8K prior

JPY +48K vs +48K prior

CHF +10K vs +15K prior

CAD -21K vs -21K prior

AUD -10K vs -11K prior

NZD +11K vs +9K prior

The euro continues to consolidate after the break above 1.20 but the gains through that level have given the bulls increasing conviction.


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