In its latest FX positioning tracker, Morgan Stanley notes that pretty much everyone has been selling the euro in the past week, aside from Japanese retail accounts who bought for the fourth week.
“EUR was the most sold currency by non-commercial IMM accounts, bringing their short EUR positioning to the largest since March 2017. This was driven mainly by leveraged funds selling while asset managers were buyers. Global macro funds also sold EUR for the second week, while sentiment turned more bearish. Large short EUR positioning suggests that risk/reward may be skewed to the upside for EUR going into the ECB meeting, particularly if the ECB strikes a bullish tone on inflation and downplays risks to growth,” they write in a note today.
They also say that caution is warranted on CHF shorts and that CAD may be more vulnerable that AUD and NZD in an environment of tightening global liquidity. Overall, the most crowded trade remains the US dollar.