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FOREIGN EXCHANGE

CME: Clueless in Chicago

On the surface, it would appear that the latest IMM Commitment of Traders report shows that the market hasn’t got a clue where many currencies are going. According to research put out by Standard Chartered this week, the net speculative positions taken out on the CME against the US dollar amounts to just $177 million. “The fact that the balance remains so small – whether for or against the USD – reflects the degree of uncertainty in the market over relative economic prospects,” the banks says.

However, within the figures, net GBP-short positions remain close to historic highs, so the pound’s strength this week, even though the BofE cut rates again, must be causing some scratching of heads and a fair amount of pain. “The fact that net shorts remain high and GBP is recovering implies the risk of a more powerful short squeeze is significant,” Stan Chart warns.

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