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Hedge Funds and Large Speculator Positions: Week Ended February 2

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Part 5
Hedge Funds and Large Speculator Positions: Week Ended February 2 PART 5 OF 7

Why the Euro Is Still the Best among G7 Currencies

Euro retained its gains last week

The euro (FXE) exchange rate closed the week ended February 2, 2018, at 1.2462, rising 0.33% against the US dollar (UUP). The euro was the best-performing currency among the G7 (Group of Seven) currencies. Most of them fell against the US dollar, which rebounded on the back of improved inflation expectations in the United States and a round of profit booking among currency traders. Economic data reported last week indicated that the Eurozone’s economy grew 2.5% in 2017, the fastest pace in more than a decade. The last time economic growth was reported above that level was in 2007 at 3%.

European equity markets (VGK), along with their global peers, moved lower last week. The German DAX (DAX) led the negative charge, ending the week 4.1% lower. The Euro Stoxx (FEZ) fell 3.2%, and France’s CAC fell 2.8%.

Why the Euro Is Still the Best among G7 Currencies

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Euro speculators decrease their bets

According to the latest COT (Commitment of Traders) report released on Friday, February 2, 2018, by the CFTC (Chicago Futures Trading Commission), speculator positions increased by 4,000 contracts last week. The total net speculative bullish positions on the euro (EUFX) increased from 144,717 contracts to 148,742 contracts as of January 30, 2018. That’s the highest level of the long euro position since the recession of 2007–2008.

Outlook for the euro

This week, there are limited data scheduled to be reported from the Eurozone, which could keep the positive momentum going. Improving economic conditions have limited the concerns of European central bankers about the rising currency value. Usually, they would attempt to talk the currency down. Mario Draghi, president of the European Central Bank, and Jens Weidmann, president of the Deutsche Bundesbank, are scheduled to speak this week. Their comments on the rising euro could be the only negative factor for the shared currency this week.

In the next part of this series, we’ll look at the expectations for the Bank of England’s February meeting.

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