Soc Gen: More long positions need a "wash out" to unlock risk-on mood

EURUSD view from Societe Generale

Societe Generale Cross Asset Strategy Research discusses the relation between EUR long positioning and the risk sentiment across the FX market which seems to be impacting investors appetite for buying high-yielders such as AUD and NZD.

They argue:

The "europhoria" that built over the summer was reflected in the build up of a large EUR longs on the CFTC data, and we will need to wash those out before the correction ends.

The euro correction seems to be important in terms of FX risk sentiment (appetite for higher yielding currencies in general). We might need to flush out euro longs to unlock a more ' risk-on' mood across FX"

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