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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (5248)	4/29/2004 1:02:45 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Heinz on Currencies Date: Thu Apr 29 2004 11:32 trotsky (fears of a dollar short squeeze) ID#377387: Copyright © 2002 trotsky/Kitco Inc. All rights reserved are entirely unfounded. as per the most recent CoT report from the Chicago Merc, the commericals are e.g. 4 to 1 net long the Swissie ( which means, the specs are long the dollar and short the swissie in equal proportion ) , meanwhile the speculator net long position in the Euro is one of the smallest of the past 5 years. the specs are also 2:1 net short the Mexican peso and the big specs are net short 6,000 Yen contracts ( however, the commercials are also still slightly net short yen, on account of a relatively large small trader long position, which no doubt got decimated this week ) . in other words, what short squeeze? while these contracts represent only a small slice of the total forex market, they DO represent a statistically significant sample of forex sentiment. and right now, it looks like in spite of the dollar's unability to overcome the reigning down-trend line, everybody is betting on a rising dollar. in the same vein, the speculators now hold a huge 240,000 contract net short position in the eurodollar contract, which represents the widespread expectation that interest rates on the short end must go up real soon. more likely, they will actually resume their decline in view of this outsized overoptimistic bet.