Societé Generale - "The market went through a large scale adjustment of its CFTC funding position by switching out of their USD shorts into a USD long position as of last Tuesday. It suggests that the market is continuing to bet that whether in a risk off environment or a risk on environment the USD has more chances to rise vs mature economies such as those of the UK, EU or Japan. This is in line with another attempt at a break higher in US Treasury 10 year yields.
The divergence between a steady recovery in the US and an uneven one in Europe continues, helping to confort EURUSD shorts.
(...) In such an environment, short EURUSD and its better expression short GBPUSD (and long USDCHF) are sells on rally. These long USD positions are presumably partly hedges against global portfolios that are skewed towards risk taking, taking advantage of the relatively low level of FX vols. We have no news today out of the US and Canada. The impact of the Italian downgrade is still percolating through equity markets suggesting some consolidation within ranges for G10 pairs."