This morning price action just seems to be more of the same.  The DX is weaker again and the euro is stronger.  The only economic data out of Europe overnight appears to be German industrial production, which unexpectedly fell.  The euro has shaken off that data to rally further.  The dollar has quickly fallen out of favor among traders in the past month.  The chart on the following page shows the combined managed money net position of the key FX futures at CME.  This includes EC, JP, SF, CD, AD, and BP.  The higher the figure moves, the more net short the market is leaning against the dollar.  As you’ll see from the chart, the total positioning against the dollar is now near its largest level since early last year and is relatively “elevated” in general.  Friday’s solid NFP bounce in the DX allowed it to back off from a major technical breakdown, but obviously the market in general is not optimistic towards the dollar’s chances here.  With the debt ceiling issue looming ahead, I can’t say I’m optimistic either.

Combined FX Managed Money Net Position

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