We could not help but be drawn to the following headline and corresponding article from Bloomberg:
Dollar Optimism Climbs to 15-Month High on Deficits
Feb. 10 (Bloomberg) — Investors are the most bullish on the U.S. dollar since November 2008 on concern that weakening government finances in European nations will hurt the global economic recovery, a survey of Bloomberg users showed. The world’s reserve currency will rise over the next six months, according to respondents in the Bloomberg Professional Global Confidence Index. Confidence about the outlook for the global economy among the 2,486 participants in the survey, taken before European Union officials said they may aid Greece yesterday, dropped from the highest level since the series began two years ago.
This article confirms the bearish sentiment towards the Euro. Believe it or not sentiment towards the Euro has never been this bearish. The graph below gives the net long position on Euro Futures:
Well it seems that being long the USD right now (short the Euro and associates) is perhaps the most crowded trade in the world! By default that means being short commodities, equities, and gold is also a crowded trade.
Yes we are well aware there are good reasons as to why one should be short the Euro, but if that involves joining every trader and his analyst in the same trade then it is a very bad idea. This is perhaps one of the most optimal times over the last 18 months at least go to short the USD…..and long everything else.
