With the EU intent on rooting out evil speculators preying on Greek debt, traders say that hedge funds have been selling their credit default swaps and covering short Greek bond positions. To maintain their exposure against Greece they are said to have added to short EUR/USD positions, helping prompt the new lows this morning. An elegant explanation which helps answer some of my earlier confusion…
EUR/US has pulled back sharply from the 1.3599 level and now trades at 1.3540. Cable is pulling back from a rally to the high 1.4980s and now trades at 1.4955.