Specs continued to buy the Australian and the Canadian dollars. The aggressive acquisition of these two currencies, plus to a small extent the NZD almost negates the big positions the specs have short the euro and the Swiss franc.
When all the spec positions, including the long position in the Dollar Index, are combined, the total net USD long is down to only 34,803 contracts. This is the smallest USD long position since the report of September 13th, 2011, the first week when specs flipped to the long side of the USD.
We note the large specs in the pound have flipped to the long side. The market has not rewarded them in this trade, to date.
The activity in the Australian dollar is quite interesting. There has been a sizable build in the open interest as the large players, probably funds, buy the AUD. With continued bad economic news coming from China, it is peculiar to such a degree of bullish interest in the aussie.
- US Dollar Index: There was a slight increase in the open interest (the total number of longs and shorts in the market) but there was little change in net positions. The small spec is a 3.2 ratio long and the large spec is a 4.8 to 1 long.
- Euro (EUR/USD): Specs reduced their net short position in the euro during the period by about 19K contracts. Large specs remain better than a 4 to 1 ratio long, but were responsible for trimming their net short about 13.6K. The small spec remains short but did buy 6K versus the sales of only .6K.
- British Pound Sterling (GBP/USD): The large specs and commercials flipped positions during the period. The large specs bought 13.5K contracts and are now on the long side of the pound. Small specs remain net short, but they too were net buyers. The pound broke to the upside on Wednesday 08 22, but since then it has been in retreat.
- Japanese Yen (JPY/USD): There was a reduction in the long side of both size specs. Large specs reduced their longs by 12K and increased their shorts by 6.9K, but the large specs remained long. Small specs, which have been short, remained short, increasing their net short by 8.0K. This spec activity caused the commercial to flip to the long side of the yen. Large specs and small specs continue to disagree on market direction in the yen.
- Swiss Franc (CHF/USD): There was continued liquidation in the spec short positions in the SF. Large specs still, though, remain a 3.6 ratio short.
- Canadian Dollar (CAD/USD): The loonie specs aggressively added to their longs. Large specs added 22.5K to their net long taking them past a three ratio long. The small spec added 6.5K to their long and are now about a two ratio long. There has been a very big build in the CAD open interest as we approach expiration in the September contract. We wonder how much of this build is related to exporter pricing.
- New Zealand Dollar (NZD/USD): Specs continue to make small additions to their long position in the kiwi. Large specs are a 5.7 ratio long, and the small specs are a 2.4 ratio long. The market seems to be losing the upside momentum.
- Australian Dollar (AUD/USD): The speculative buying in the AUD continues to soar, as the large specs buy some more. The total spec long is now up to 98K contracts. This is the largest spec long in the AUD since the report of July 26, 2011, when the total spec long was 101.6K. The spec buying had run the market up to the all-time high above 110. After achieving that high, the AUD reversed, selling all the way down to a spike low of .9389 in early October. It is interesting to note that this time the massive spec buying did not run the market up to a new high.
