Long Euro? Short Gold? ....Soon

The Euro which is everyone's mule has been slaughtered this year. Non Commercial short positions in the Euro have been hitting records.

This looks to me like the Euro is begging for a short squeeze up.

The net selling has been a little bigger than during the Lehman swoon of 2008. Most of the selling (70%) during the 2008 credit crunch was just longs being liquidated. This time some 70% of the selling are shorts leaning on the Euro. This is much more of a speculative risk position. As we all know when speculative risk positions are put in there is always a risk aversion trade around the corner. I believe a serious snap back Euro trade is nearing.

Yesterday's nice rally was all derisking from the short Euro trade. All types of rumors from ECB buying to Greece leaving the EU were attributed to the rise. It was also nice that the Swiss CB was also selling CHF and buying Euro's as well.

Gold on the other hand is so in vogue that it has to correct. News that Dubai has installed Gold ATM's is just too much. I don't see a huge correction in the yellow stuff, but safety trades like gold when they get the publics attention no longer become safety trades. News that perma bear Jeremy Grantham just bought doesn't help either. When gold was floundering in 2003, the FT and WSJ were saying Gold was dead, it was a barbarous relic. That was the time to buy. Now the FT and WSJ are talking up Gold.