Here’s good news for EUR/GBP

Latest Release Dated 07/06/06 (10:00 GMT)

· EUR/USD — SSI Signals More Gains for EUR/USD but Positioning Could Change on NFP
· GBP/USD — Divergence Between EUR/USD and GBP/USD Signal is Positive for EUR/GBP
· USD/CHF — Sharp Decline in USD/CHF Positions
· USD/JPY — Ratio has Remained Net Short for One Month

As of July 6, 2006 (5:00 EST, 10:00 GMT)

SSI_1_07.06.06

SSI_2_07.06.06

SSI_3_07.06.06

The ratio of longs to shorts in the EUR/USD is -1.04, which is within the extreme +/- 3 range. The ratio has flipped from net long to net short over the past week coinciding with a 200 point rally in the currency pair. Total positioning remains relatively unchanged, up only 1.3 percent with a 12.5 percent rise in short positions and a 8.2 drop in long positions. Even though the EUR/USD ratio still remains net short, it is holding very close to parity and will probably remain so until after the US non-farm payrolls report on Friday. In the meantime though, the bias is still for more gains in the EUR/USD as the USD/CHF ratio now confirms the EUR/USD ratio and both signal more dollar weakness.

SSI_4_07.06.06
The ratio of longs to shorts in the GBP/USD is 1.21, which is within the extreme +/- 3 range. Over the past week, the GBP/USD ratio has been flipping back and forth despite the fact that the currency pair quietly grinded higher. Total positioning has fallen off slightly by 7 percent on the back of a 13 percent slide in long positions and a 2.4 percent rise in short positions. With the ratio still net long, the SSI continues to signal more weakness in the currency pair, making 1.8250 a possible target. The divergence in direction between the EUR/USD and GBP/USD SSI ratios signals possible gains in EUR/GBP.

SSI_5_07.06.06
The ratio of longs to shorts in USD/CHF is 2.53, which is within the extreme +/- 3 range. The ratio has remained net long for the past two weeks, correctly signaling to us that any losses in the EUR/USD would have been limited. USD/CHF has also continued to move lower by another 200 points which is consistent with the USD/CHF SSI contrarian signal. The mix of positioning however has changed significantly with total positioning down by 46.7 percent. Both long and short positions have been cut substantially during the long weekend holiday with short USD/CHF positions down by 67 percent and long USD/CHF positions lower by 29 percent.

SSI_6_07.06.06
As of 5am EST, the ratio of longs to shorts in USD/JPY was -1.29, which is within the extreme +/- 3 range. The ratio has remained net short for four weeks now and continues to stay net short. Although USD/JPY still remains at very lofty levels, it has fallen off 75 points since last week. Total positioning has fallen 15 percent with short positions leading the slide (down 24 percent). Long positions however remained unchanged. For the time being, the USD/JPY SSI signal is still forecasting more gains for the currency pair, but anything goes post NFP and as usual, we will update the SSI numbers then.