Intraday Market Thoughts

ECB Inching toward Bond Purchases, & Latest CFTC Reports

by Adam Button
Jul 30, 2012 0:22

ECB officials will hold high-level meetings as President Draghi tries to convince Bundesbank leader Weidman to unleash the tactic in an effort to end the crisis. The euro was the best performer last week while the US dollar lagged. CFTC positioning showed a pullback in EUR shorts and an increase in JPY longs. 1 EURUSD long hit all targets as did both EURJPY longs. See more blow in our NEW LOOK Premium Insights.

Bloomberg reports that Draghi will meet with Weidman in the coming days and hopes to convince him to use new tools as the crisis in the eurozone reaches a new stage. The report suggests the ECB will buy bonds on the primary and secondary market. An LTRO operation beyond 3 years, an ESM banking licence and rate cuts are also up for discussion.

The euro began rallying Wednesday and continued higher through the end of the week, touching 1.2390 before receding to 1.2322. The ECB and BOE meet Aug 2, one day after the Fed ensuring the week ahead will be momentous.

Fridays US GDP report was in-line with the consensus estimate at +1.5% but Q1 growth was revised to 2.0% from 1.9%. The July final University of Michigan consumer sentiment reading was revised to 72.3 from 72.0.

A weekend report from The Economist said a full bailout of Spain is looming. Reuters also reports that the ECB may write down its Greek debt holdings in a last ditch effort to restore confidence.

CFTC futures positioning data, which reflects the close on Tuesday, showed EUR shorts pared back but still highly exposed to a short squeeze. The market is quickly piling into AUD and JPY longs.

EUR net short 155K vs 167K last week

JPY net long 25K vs 11K prior (highest since Feb)

GBP net short 3K vs 7K prior

AUD net long 26K vs 14K prior (highest since May)

CAD net short 2K vs 1K prior

1 of 2 EURUSD longs are in progress (other unfilled by 9 pips). Both EURJPY hit al targets. USDJPY short awaiting fill. USDCAD short unfilled (need 1.0120). 1 of 2 GBPUSD longs in progress, other unfilled. GBPJPY, AUDUSD, silver and oil are all in progress. DIRECT ACCESS to today's Premium Trades is found here: Non subscribers can click here:



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