US & Greek Politicians Stand in the Way of Budget Resolutions

Markets spent last week sorting through the election wreckage. The yen was the top weekly performer but CFTC positioning data showed that speculators continue to believe its overvalued. 1 of 2 EURUSD Premium Insights hit all targets, while oil long stopped out. See more details below. More detail is found below.

Greece Athens is thinking to avoid defaulting on a 5bn debt repayment via a treasury bill auction on Tuesday. but Greek banks expected to buy the issue can only raise about 3.5bn of collateral acceptable to the European Central Bank, according to two senior Athens bankers. Yet, Athens is expected to raise no more than 3.5bn in collateral from Greek banks.

Obama and Boehners sparring damaged market sentiment late on Friday and showed once again that the market is fixated on politics at the moment.

Lost in the overstated worries about taxes and the fiscal cliff, the US economy continues to show better signs of growth. The U Mich consumer sentiment survey rose to a five-year high ahead of the holiday spending season and wholesale inventories were also much stronger than expected.

That helped spark a brief risk rally that was snuffed out by politics.

Unfortunately, with the calendar light in the week ahead, politics will remain on the front pages and sentiment will remain vulnerable.

The S&P 500 and EUR/USD both closed below their respective 200-day moving averages on a weekly basis for the first time since June, albeit narrowly.

CFTC Commitments of Traders

The weekly data was gathered just before the election so it may not be a great representation of current positioning, although the rise in euro shorts probably continued.

Euro shorts increased to 67K from 58K last week

JPY shorts increased to 40K from 37K last week

AUD longs increased to 60K from 52K last week

CAD longs decreased to 75K from 79K last week

NZD longs increased to 19K from 16K last week

GBP longs decreased to 19K from 23K last week

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-AB