Whilst there might have been a 1001 reasons to blame the moves witnessed today on the most obvious is market correction. The IMM futures positions as at end of day 2 Nov showed US Dollar short positions had increased from the previous week from 27.5bln to 29.3bln. HSBC says this was before Fed QE2 announcement, mid-terms and payroll data. So all that volatility leading into QE2 people actually added to short US Dollar positions. HSBC says additionally that up to Friday one might have expected people to add further to these short positions given the midterms and QE2 result.
It is therefore not to difficult to conclude then that we are going through a well overdue market correction. Given the airplay on the EU periphery situation we may indeed have more Euro downside to come.
