Once again currency futures speculators increased their euro and Swiss franc shorts. The total euro short advanced to 204,608 contracts and the SF to 35,035. Since the Swiss National Bank has pegged the franc with the euro, the franc is merely a proxy for the euro. Specs also have a large position, long the DI Index futures contracts.
With the market loaded with short euro positions, this might explain Friday rallies in the euro as specs take their money off the table ahead of the weekend. The final CME report from Friday shows the euro volume was down, but only by 4106 contracts. We have yet to see a period of panic short covering in the euro.
The tally of the contracts reviewed shows the net USD long position advanced to 300,125 futures and delta adjusted options. While the net long USD is large, it is not close to a record. Part of this is because there was a reduction in the short Japanese yen positions. Another reason the net long USD position did not increase more was because there was spec buying in the aussie and NZD currencies versus selling of the USD.
There also seems to be a new trend, spec selling of the pound. Short positions have slowly grown back up to 21.2K. So far, this trade is not a money winner, probably break even at best. This is not the type of market action that encourages more selling.
- US Dollar Index: Despite the fact that there was a small decline in the OI, the total spec net long increased. This was possible with both spec groups, adding to their long, and decreasing their shorts. Large specs are now a 6.1 ratio long and the small specs are a 5.3 to 1 long.
- Euro (EUR/USD): The open interest grew by 25.2K in the period, and the spec net long grew by about the same amount. The spec net long position is now 204.6K, with the large spec a 5.2 ratio long. It is easy to conclude that this currency is oversold but the new bears who have added to short euro positions disagree.
- British Pound Sterling (GBP/USD): There was a slight increase in the total spec short position in the pound to 21.1K. After flipping to the short side of the pound last period, the large spec added 2.6K to his position. The net short positions by the specs is very modest.
- Japanese Yen (JPY/USD): The different spec groups continue to disagree on where the market is headed. The large spec is long the yen and the small spec is short, but the small spec's net position is bigger than the large specs.
- Swiss Franc (CHF/USD): With the continued peg by the Swiss National Bank of the franc with the euro, the SF serves as a proxy for the euro. Consequently the specs have been short the SF as the euro works lower. Large specs are a 4 ratio short but they did reduce the short by 1.4K.
- Canadian Dollar (CAD/USD): The large specs are long the CAD by 4.6K, and long the small specs have a very nominal long. Trade in the CAD has been quiet.
- New Zealand Dollar (NZD/USD): Specs are long the kiwi by about a 2 to 1 margin, after adding to the positions during the period. They are now long 7.7K contracts.
- Australian Dollar (AUD/USD): With commercials reducing both long and short positions, the total OI in the aussie declined by 10.5K. Large specs increased their net long by about 7.9K. The small spec is short the AUD but did modestly reduce this short.
