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Monday's FxBriefing

|Includes: ADE, BEO, BEP, CNY, iPath EUR/USD Exchange Rate ETN (ERO), EWA, EZU, FEZ, FXB, FXC, FXE, FXF, FXY, GBB, GLD, GRE, JYN, SPY, SPY, UDN, UUP, VCR, XLY

Risk appetite pushed all of the higher yielding currencies higher. The Euro (EUR), Aussie (NYSEARCA:AUD), Kiwi (NZD), Cable (GBP), and Loonie (NYSEARCA:CAD) rose in sync against the U.S. Dollar. The rally is mostly based on technical factors compared to the usual moves initiated by the fundamentals.

COT, Commitment of Traders, released each Friday showed that abundantly more short positions were established in the Euro compared to long positions. The latest report showed the second highest reading this year of -18620 contracts. What does that mean for the Euro? The following states that there is abundant skew towards the short side, therefore, the short need to cover their positions eventually and any significant change in fundamentals or technicals, could drive the Euro higher. This we have seen in the previous week when the Euro established a bottom at 1.1875 and pushed higher. EUR/USD currently trades near 1.2300.

Manufacturing sector in EU continues to perform relatively well. The Industrial Production rose for the fourth consecutive month coming at 0.8% against anticipated 0.7%.

Meanwhile, initiative by France (Europe’s second largest economy) to cut public spending by €45 Billion or $55 Billion and raise retirement age was regarded as positive for the Euro as countries in EU continue to crackdown on run away debt.

New Zealand’s Retail Sales printed a well above expectation at 0.3% compared to -0.2% anticipated. The following allowed the Kiwi to be pushed to 0.7000 against the buck, before a temporary retracement. The Aussie broke through 0.8600 and currently trades between 0.8600 and 0.8700 benchmarks. The Loonie is approaching parity with the US Dollar, currently making progress towards 1.0200.

Despite the fact that the government cut thee assessment of the economy, the Cable broke through key resistance of 1.4700. The government official cut the growth of the economy from 2011 to 2014, yet kept the optimism of this year’s performance at 1.3% expansion rate.

The calendar remains relatively timid for the day, therefore look for sentiment to drive the markets. Currently, risk appetite is dominating; however, optimism must have a driving force behind it when the long term trend is towards risk aversion.



Disclosure: No Positions