The euro rose to 1.1271 (+ 0.17%) against the dollar on 12 July, at the end of a week that saw again gloomy macro-economic for the eurozone, and better ones for the United States, especially related to the labor market.
In its last meeting, the Governing Council of the ECB maintained an extremely accommodative monetary policy stance, providing new details on liquidity auctions (T-LTRO) and postponing to mid-2020, rather than at the end of this year, the first rise in interest rates. The reason for such a move must be found in the slowdown in eurozone growth and the fact that inflation continues to remain far from the 2.0% target.
The Eurozone CPI index remained stable at +1.2% on an annual basis in May.
The Federal Reserve left interest rates unchanged in the range of 225-250 basis points at the last FOMC meeting and suggested that if macro-economic data worsens, it is ready to take expansive monetary policy measures, to bring the inflation rate back to the target level of +2.0%. The monetary policy stance and the Fed’s forward guidance may therefore become more dovish.
The latest COT report on Euro FX, published by the Chicago Mercantile Exchange and referring to the Futures Only positions published on July 9th, shows a sharp increase in short positions by asset managers, while leveraged funds have decreased their long positions.
According to the latest data, leveraged funds have decreased their long positions by -4,369 units to a total of 31,821 and increased short positions by +907 units to a total of 123,452, maintaining the difference between long and short positions below the significant threshold of 100,000 unity and thus proving to bet on a depreciation of the euro against the dollar in the short term. The dealers increased their long positions by +2,404 units to a total of 36,339 units and decreased their short positions by -6,756 units to a total of 136,361, proving to bet on an appreciation of the euro in the medium and long term. Finally, asset managers decreased long positions (-1,739) to 307,059 units and short positions (+12,346) rose sharply to 155,404 units.