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German corporate currency gurus go long EURUSD

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.

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.

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.

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