Deutsche’s platform, which aggregates and nets flow from its hedge fund, currency manager, real money and CTA clients, shows that the aggregate EUR short still remains the biggest of any currency, after registering only a mild reduction after the Greek debt deal. In contrast, the short position in the yen has more than doubled in under a week, moving steadily closer to the level seen in EUR short.
“The BoJ’s unforeseen step to embark on further QE on February 14 appeared to create a wave of yen weakness,” says Henrik Gullberg, FX strategist at Deutsche Bank. “Poor Japanese GDP and trade data added further impetus for investors to add to the yen short.”
Morgan Stanley’s positioning tracker tells a similar story. JPY positioning since Monday has continued to move towards short territory, while the EUR’s short remains firmly in place.
| EUR positioning unchannged since Monday |
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| Source: Morgan Stanley |
Looking at the price action since February 14, USDJPY has surged from the ¥77 mark and as high as ¥80.70 on Friday, levels not seen since the beginning of July. That was at a time when the market was far more focused on the Greek debt crisis, with Greece’s continued participation in the eurozone potentially at stake.
Meanwhile, EURUSD has since managed to break the $1.34 level on Friday, but the initial move in spot after the second Greek bailout deal was reached was decidedly subdued.
The surge in USDJPY compared with the relative placidity of EURUSD once again demonstrates it is unexpected events that tend to move markets, not those that are largely anticipated, however important they may be.
“Even though it might have seemed that the Greek debt crisis was a much bigger issue, with Greece’s very participation in the eurozone at stake, the market has had more than two years to acclimatise itself to this sort of crisis moment,” says Steven Barrow, FX strategist at Standard Bank.
“In contrast, the market has had no time to acclimatise itself to an easing of policy from the BoJ that came largely out of the blue.”