UBS in their morning note say that CME positioning has been a leading indicator for movements in EUR/USD over the last 6 months and by last Tuesday (when the CME report is completed) short Euro positions had been trimmed by 13% from the week before. UBS says this explains/confirms EUR/USD retracement higher over the latter part of last week.
In other pairs, AUD/USD short positions were cut by a whopping 36% and given the moves in the latter part of last week, positioning may have moved to short given the extent of the AUD/USD sell-off. UBS say AUD short positions (through the CME) have rarely lingered for long and although downside risks remain, significant positioning inspired support could now be engaged.
