Latest Release Dated 08/17/06 (10:00 GMT)
· EUR/USD EUR/USD SSI Ratio Signals Further Euro Strength
· GBP/USD SSI Signals Bid Tone in GBP/USD, But Rising Slope Could Suggest Mild Corrections
· USD/CHF Carry Prompts Speculators to Remain Mostly Net Long for 2 Straight Months
· USD/JPY Ratio near Parity, Little Direction from SSI
As of August 17, 2006 (5:00 EST, 10:00 GMT)
The ratio of longs to shorts in the EUR/USD is -1.70, which is within the extreme +/- 3 range. On a week by week basis, the EUR/USD ratio has remained net short, coinciding with the fact the EUR/USD starts this Thursday to Thursday week at the same level that it ended last week at. During the past week however the ratio flipped back and forth and that has proven to be nothing more than mere noise. In addition, with the USD/CHF ratio remaining net long over the past week, losses in the EUR/USD were limited. The same condition exists this week as it did last week with the EUR/USD ratio net short and the USD/CHF ratio net long. Therefore, the SSI continues to forecast limited weakness for the Euro and most likely, more gains ahead for the single currency. Total positioning has picked up with the recent activity in the EUR/USD. Open positions are up 13.8 percent led by a 22.5 percent rise in long positions and 9.3 percent rise in short positions.
The ratio of longs to shorts in the GBP/USD is -2.66, which is within the extreme +/- 3 range. The ratio has remained net short throughout the past week and continued to signal firmness in the British pound. With the ratio still very net short, the GBP/USD should remain bid. However as we indicated last week, the slope of the ratio is trending upwards, so small corrections may be still be possible. Meanwhile total positions are higher by 9 percent since last Thursday thanks to a 12 percent rise in long positions and 7 percent rise in short positions.
The ratio of longs to shorts in USD/CHF is 1.85, which is within the extreme +/- 3 range. This marks the eighth consecutive week or second straight month that longs outweighed shorts on our books which is primarily due to the large interest rate spread between the US Dollar and the Swiss franc in the dollars favor. After having fallen 9.8 percent last week, total positions are up by 5.2 percent this week. The increase has been completely due to a 30 percent rise in short positions as long positions fell by 4.9 percent. The USD/CHF ratio is still giving the same signal as the EUR/USD ratio, which is for more dollar weakness.
The ratio of longs to shorts in USD/JPY is -1.07, which is within the extreme +/- 3 range. The ratio has flipped from net long to net short but still remains virtually at parity. This highlights the overall range trading behavior of the currency pair and even though the SSI is signaling for mild gains this time around rather than weakness, until the ratio increases significantly in one direction, its reliability is still limited. Total positions have increased 11 percent over the past week with a 4 percent rise in long positions and 19.8 percent rise in short positions.
