special reports

Euro SSI Signals a Possible Test of 1.25

Thursday, 22 June 2006 14:08:19 GMT  |  Kathy Lien, Chief Strategist

· EUR/USD – SSI Signals a Possible Test of 1.25

· GBP/USD – Surprising News of BoE Walton’s Death Stops Out Longs, Pushing Ratio Back into Deep Positive Territory

· USD/CHF – Sharp Increase Speculators Trading USD/CHF

· USD/JPY – Ratio Looks for More Gains in USD/JPY


As of June 22, 2006 (8:30 EST, 12:30 GMT)



*Ratios Updated as of 8:30am EST Due to Recent Flips








As of 5am EST, the ratio of longs to shorts in the EUR/USD was -1.26, which is within the extreme +/- 3 range.  The EUR/USD ratio flipped from long to short Wednesday afternoon after the positive SSI reaped us over 300 points in profits over the past 2 weeks.  However despite the brief 50 point rally since the flip, the ratio has flipped back to positive once again.  We usually only cite the 5am SSI numbers on Thursday because it does not vary much from the later numbers, but given this morning’s flip, it is worth noting.  As of 8:30am EST, the ratio is +1.26.  The USD/CHF ratio has also flipped back to positive territory and is sitting at +1.45.  Taken together, the SSI is signaling a possible test of 1.25 in the Euro.  Over the past week, total positions in the EUR/USD have increased by 16 percent led primarily by a 70 percent rise in short positions.  Long positions have fallen by 17 percent.




As of 5am EST, the ratio of longs to shorts in the GBP/USD was -1.14, which is within the extreme +/- 3 range.  After hovering near parity last week, the ratio has been flipping back of forth, which is indicative of the recent range trading in the currency pair.  Even though the ratio was net short as of 5am EST this morning, news that BoE member Walton has died forced the ratio back into deep positive territory.  As of 8:30am EST, the ratio is +1.95.  The previous range trading had most traders believing that the currency pair was bottoming, but the surprising news and subsequent break lower in the GBP/USD has forced many traders out of their long positions.  Total positions have fallen by 10 percent over the past week to the lowest level since August 26,2005 with longs falling by 18 percent while shorts decreased by 1.9 percent.





As of 5am EST, the ratio of longs to shorts in USD/CHF was -1.03, which is within the extreme +/- 3 range.  After remaining mostly net long for over 2 months, the USD/CHF ratio flipped to net short Wednesday afternoon.  However like many of the other ratios, it has since flipped back to net long territory. At 8:30am the ratio is +1.39, positioning in USD/CHF has shot up significantly with rising geopolitical tensions.  Total positions are up 59 percent thanks to a 126 percent rise in short positions and a 22 percent rise in long positions.  Once again, the USD/CHF ratio conflicts with the EUR/USD signal, suggesting that any further losses in the EUR/USD will be more of a grind lower rather than a quick slide.





As of 5am EST, the ratio of longs to shorts in USD/JPY was -1.35, which is within the extreme +/- 3 range.  The ratio has remained net short for two weeks now and continues to be net short.  However since we have updated the other ratios, it is good practice to update this one as well.  As of 8:30am EST, the USD/JPY ratio is -1.70.  This has coincided perfectly with the fact that the currency pair has remained relatively bid, rising another 100 points over the past week.  Total positioning is only 3.4 percent higher with short positions rising by 5 percent and long positions increasing by 1.3 percent.  The ratio continues to look for more gains in USD/JPY.

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