The net speculative IMM long position, as of last Tuesday, in EURUSD is at the high of July 2011. In August of that year the EUR broke the 1.40 level and bottomed the next summer at 1.2041 (cash). Unsurprisingly this was also a high in the EURUSD shorts.
Some suggest that the correction of the last couple of days, probably, have reduced this number. We doubt so, given the volume levels on the IMM.
On the economic front, our scenario of a gradual global recovery, in the second half of the year , is panning out and there is not much to add.
China is showing some revival (thanks to the lowering of taxes for small businesses and added investments in infrastructure). Important for the smaller Asian is the Markit manufacturing PMI for Taiwan (May 47.1, June 49.5, July 48.6, Aug. 49.2) which continues to indicates a modest pickup in the technology sector, often a leading indicator for the region. In Hong-Kong exports jumped 10.6 % in July (consensus 3.5%) .
Japanese survey’s also show a rebound, confirming that the summer lull should be over.
In the rest of the EM, Brazil and India continue to disappoint. In the EU periphery the greatest short term risk remains Portugal.
In the US, from this side of the Atlantic, it looks like the continuous power struggle around the budget will now be compounded by the Syrian question. I will return to the Middle East question in a separate report.
Technically, EURUSD, in the last months, has been behaving as in a traders dream. We covered our short position at 1.3225 and did not re-enter the position on Monday. The week looks dangerous between the economic data and the geopolitical tensions. We are trading exactly on the first weekly support, so we want to see what comes next before forming an opinion.
EURUSD Weekly Pivot on Sept .Futures
PP 1.3285, R1 1.3350, R2 1.3465, R3 1.3645
S1 1.3170, S2 1.3105 , S3 1.2925, S4 1.2745