EUR/USD decline is just position readjustment, not long dollar - Scotiabank

Analysts at Scotiabank noted that France reported disappointing industrial production data for Mar (-0.4% M/M, versus +0.4% expected) but Spanish data was robust (+1.2% M/M versus -0.1% forecast). 

Key Quotes:

"Short-term spreads versus the USD remain onerous (-309bps) but are stable while longer-term spreads continue to widen out against the EUR (10Y spread at a new “wide” today of -219bps)."

"Spreads are still not correlating too strongly with spot, however."

"We continue to see recent EUR weakness as being driven mainly by position adjustment, reflecting the recent build-up of substantial, speculative EUR long positions, rather than a fundamental reappraisal of the USD’s overall outlook."