German corporates have gone long EURUSD for the first time in more than a year after a complete re-evaluation of their positions, following news of the European Central Bank’s new bond-purchasing programme.
EURUSD positioning of speculative and strategically-orientated market participants
Source: CME, Commerzbank
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.
German companies and their assessment of EURUSD over the next 3, 6 and 12 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.