Flash: EZ deflationary levels approaching - Societe Generale

CFTC Commitments of Traders Report - Week Ending Tuesday, February 4· IMM data for the week through Tuesday February 4th showed little major change in overall market positioning. Investors rebuilt their aggregate exposure to the USD in the latest week (to the equivalent of USD21.4bn, from USD17.7bn when measured against the major currencies) but overall exposure remains close to recent levels.· Investors took a punt on the EUR last week—building short positions ahead of the ECB policy decision. Net shorts rose to 13.6k contracts last week, the biggest bet against the EUR since July. But it is probably safe to assume that the outcome of the ECB meeting and subsequent price action likely means that some of these positions will have been taken back or reversed in next week’s data. Net GBP longs were cut in half last week (+10.9k contracts, down from +22.1k in the prior week). A small net CHF short last week was turned in a small net long this week (of just +2.2k contracts). · Among the commodity currencies, speculative accounts trimmed net short AUD positions (-55.5k contracts from –65.7k last) . Minor CAD net short-covering took the aggregate bet against the CAD to –60.3k contracts (from –62.7k). Net NZD longs were trimmed modestly to +8.0k contracts (from +9.6k). · The Net JPY short position continues to get whittled down—the current net short position of –76.8k contracts is a little less than half the position that had accumulated through late December and the smallest net short since early November. · Finally, investors remained cautious on EM FX volatility last week; the large net bet against the MXN of –35.3k contracts that developed suddenly in late January remained little changed at –34.5k contracts in the latest week—a relatively large net short for a market that typically favours the long side of this trade.