Archived IMT (2010.01.08)

USD CFTC POSITIONING ALREADY ROBUST: Today's US jobs report could be a non-event in FX markets due to the increasing volume of long positions in the US dollar, as opposed to 4 weeks ago when the combination of unexpectedly positive report and deep positioning of USD shorts produced a sharp rally in the greenback. The latest CFTC figures on speculative FX futures showed net JPY shorts (vs. USD) rose to -14,903 contracts in Dec 29th from a net short position of -1,011 on Dec 22nd. Meanwhile, EUR net shorts (vs. USD) soared to -33,797 contracts from -14,327 contracts in Dec 22. Current EUR net short positioning is the largest since the record net shorts of -40,654 contracts reached in mid September 2008. And with markets expectations for payrolls raising the bar to a net creation of jobs, theres little room for a significant USD jumps. Yet, we still expect USD to preserve strength into next week, barring the occurrence of a job loss higher than 60K and an unemployment rate higher than 11%.