HSBC: Flow Summary – FXWW Chatroom

GBP selling from a variety of different communities on Wednesday turns the currency to one of the most aggressively sold over the past five days. Price did not react too much on the day though so, given this trade is now set, any sign of consolidation or the start of a rally will be a good signal that positioning is now at a short-term extreme and a move higher will be likely. 

Hedge funds continue to net-buy Euros, closing out some of the shorts set last week. This however is yet to result in a bounce for the single currency since real money have come in to take the other side of the trade. With gross flow for hedge fund buyers yesterday slipping off and volumes for the real money sellers increasing perhaps we appear on the verge of another leg down once the profit taking flows subside. Important to note as yesterday the HF Euro buying is not coming vs USDs (where they been small net-buyers) but is in crosses, EUR/JPY. EUR/CAD, EUR/AUD. 

USD buying seen over the last 5 days from most communities finally spreads to real money. The total magnitude is still small and so a continuation of this flow could be what drives the broader G10 market over the coming days.
{US} Fed’s Williams:Fed Likely Raising Interest Rates Later This Yr 
GS: EUR comments from Jon Pierce: 
After a good run the dollar has started  to wane, people still with raw scar tissue perhaps reflecting that we came a long way on pretty marginal US data beats. As the Euro popped back above the 55dma (1.0936) earlier we saw some short covering and positioning is now  lighter. USD/JPY is the biggest expression of market bullishness and to some extent it will determine the immediate price action in the Euro.
With markets trading a bit more erratically again I think the key is to look for good risk-reward opportunities and with this in mind I favour looking to fade an extension towards 1.0970/90 and lean against the key 1.1050 level. My concern though is that I am not at all sure we will be presented with this entry level. Support back at 1.0880 and then at yesterday’s 1.0819 low. 

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