Sunday November 1, 2009 - 17:01:06 GMT
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Cinneas.com - blog.cinneas.com
Is Everyone Really Short The USD?
Every morning we hear from pundits on CNBC that the short USD trade is over-crowded, and the USD is very weak... We believe both statements are incorrect.
In tackling the first, is everyone short the USD? Far from it. The speculative community certainly has a USD short position, but global central banks and world governments are decisively long the USD, and getting longer by the second. The positions held by central banks around the world far outweigh those held by the speculative community, and their anxiety over their position is increasingly spilling into the public space. It is this anxiety that speculators are picking up on; and the overwhelming positioning by Central Banks supports speculative short USD positions.
Regarding the USD being weak... The USD is essentially unchanged from where it was this time last year. The value of the USD is only a current issue for Central Banks in China, the Middle East, Russia and India. The US investor doesn't really care.
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