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Suddenly Everyone Hates The Euro & Loves The Dollar at Trader’s Narrative





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Before we look at how much traders hate the Euro and love the US Dollar, let’s check in with what I said previously about the greenback. Back in December I wrote of the sudden shift in dollar sentiment and how it made me cautious for any further advances in what was possibly, real strength in the dollar.

As you can see from the chart, the US Dollar index reversed and headed down on the exact date that I wrote the above comment (December 22nd 2009). It fell from a high of 78.45 to a low of 76.60 - not a bad prognostication if I do say so myself:

US Dollar index Feb 2010

Now to check in with the current Commitment of Traders positions on the US dollar and the Euro. The following charts are courtesy of David Rosenberg at Gluskin Sheff:

Euro speculative positions Feb 2010

US Dollar speculative positions Feb 2010

I’m not really surprised to see this as the Euro is getting hammered over the abysmal finances in the PIIGs (Portugal, Italy, Ireland, Greece and Spain). But I don’t see an edge from using the CoT data as an indicator. For example, in October 2008 when the net speculative long position in the US dollar was similarly high the US Dollar index was reaching an important top. Finally, the Daily Sentiment Index for the US dollar is now at 90% - just a data point to tuck under your hat.

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2 Responses to “Suddenly Everyone Hates The Euro & Loves The Dollar”  

  1. 1 Renato

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    The PIIGS deficit problems are not recent, and in same cases are way overrated.
    If you think about the impact those economies have in Euro Zone and the willing (not yet but will come for sure) to bailout any country that spread its debt over the european rich countries, you can see the probability of a default.
    Even Greece, which is by far the worse case, doesn seems very worried, because … nothing will happen after the deadline from central europe ends. I mean…. going forward their economies will lag for years, but thats a different story.
    Lets compare deficits, public debt between the PIIGS and the ones in US, UK? See a lot of differences?

  2. 2 J

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    Interesting and useful. Thanks.

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