Flash: USD weakness case of squeezing positions - SocGen

FXstreet.com (Barcelona) - The market has temporarily abandoned its bearish bond positions, notes Sebastien Galy, Currency Strategist at Societe Generale, as the recent Bernanke speech "emphasized some of the risks to the US economy, leading the USD lower with USD/JPY a good example" Galy said.

According to Galy, the present retreat in the USD, "Its mostly a case of squeezing positions which had built up, rather than anything more fundamental about the Fed stance." The Societe Generale Strategist adds that as seen in previous episodes, "the reactions of the market are fairly intense to small Fed nuances, an indication of some fundamental instability or great uncertainty in the market." Galy concludes saying "Helicopter Ben is generally good for equities and bad for the USD, so we have a good idea of the short term reaction until we hit another bout of very decent US data."