German corporate currency gurus go long EURUSD

Their views are worth listening to, given that the predictive powers of strategically-orientated German companies have consistently outshone those of hedge funds and other currency managers in recent years. Indeed, unlike figures from the IMM, which show speculators still hold a substantial, albeit reduced, short position in the EUR, German corporates now see appreciation potential for the single currency, according to Commerzbank’s FX Compass survey.

Commerzbank surveys the FX expectations of its main export-orientated corporate clients each month to produce its FX Compass index. It measures the proportion of bulls minus the proportion of bears in a number of EUR crosses over three-, six- and 12-month horizons.

September’s survey shows the majority of German companies now see short-term appreciation potential for the EUR for the first time in 13 months.

Over a three-month time horizon, the number of bears had already shrunk over the summer, but in September halved to just 20%, while the number of bulls, previously in the minority, doubled to 41%.

During the longer-term, however, German corporates moved into more sceptical territory.

Alexandra Bechtel, analyst at Commerzbank, says the fact that companies were now bearish on EURUSD over six- and 12-month time horizons was most likely due to the sharp appreciation of the currency pair during the past few weeks.

“The companies surveyed simply do not consider a EURUSD exchange rate of $1.30 to be sustainable in the long run,” she says.