FX Weekly: 10th October 2011

• The US dollar remains vulnerable to even marginally positive events as investor positioning shows a record amount of USD longs going into a recession

• Event risk is high in the US and Europe in Q4 suggesting the US dollar’s downtrend will be bumpy and volatile

• Rebounds in commodity currencies and the emerging markets have been particularly sharp, and the euro has benefited (as expected) during a dollar sell-off

• US Q4 earnings season begins this week; the broad health of corporate profitability in the US has been a significant influence on global risk sentiment since 2008. We see a strong chance of Q3 earnings helping to boost market confidence in similar fashion to previous quarterly earnings seasons

Share this post