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26 Feb 2013
Forex Flash: Market overextended as position squaring evident in GBP & JPY - Societe Generale
Sebastien Galy, Senior FX Strategist at Societe Generale notes that the market is left over extended in its position and the squaring of position is now evident in GBP and cross Yen.
He sees that GBP shorts were squeezed and gamma in NZD/JPY did make sense with a rather spectacular correction. He writes, “Disorderly moves in the JPY or CHF are likely to bring in a rapid response from the local authorities to break any thought of using their currencies as safe havens. The odds are that we will get comments out of Japan and Switzerland. Add to this Bernanke’s speech to lawmakers on Tuesday will likely prove dovish and we may have the right elements for this correction to not mutate into something worse.”
He sees that GBP shorts were squeezed and gamma in NZD/JPY did make sense with a rather spectacular correction. He writes, “Disorderly moves in the JPY or CHF are likely to bring in a rapid response from the local authorities to break any thought of using their currencies as safe havens. The odds are that we will get comments out of Japan and Switzerland. Add to this Bernanke’s speech to lawmakers on Tuesday will likely prove dovish and we may have the right elements for this correction to not mutate into something worse.”