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Alternative Market Briefing

Bank of America Merrill Lynch: classic market squeeze for EUR and USD underway

Tuesday, September 18, 2012

Bailey McCann, Opalesque New York: Macro hedge funds have sold the US Dollar to a net short for the first time since June, according to the latest data from lead hedge fund analyst at Bank of America Merrill Lynch Global Research, Mary Ann Bartels. They continue to buy the S&P 500 and NASDAQ 100, while selling commodities, 10 year treasuries and reducing emerging markets exposure.

The Euro appears to be in place for a short squeeze, according to the report – "a significant short squeeze could be under way that can take the euro higher than most think possible. The euro held key support at €1.31 and formed a double bottom. It is not impossible for the euro to reach into the low €1.40’s on a squeeze. First level of resistance to challenge is €1.35. Support is €1.25. Amazingly, if our upside projection is reached the long-term trend for the euro would still remain down," Bartels writes.

The US Dollar is on pace to be the exact opposite and face a long squeeze which could move the currency down near 75.

The investable hedge fund composite index was up 0.35% month-to-date as of September 12, underperforming the S&P 500’s 2.13%. Within strategies, event driven was the best performer up 0.64% while convertible arbitrage was the worst down 0.68%.

In commodities, the end of this market correct......................

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