USD Currency Short Continues

CFTC Commitments of Traders (COT) Report, published Friday 04 January 2013 - Technical Analysis. The total net USD position in the currencies we follow increased to a short of 183,017 contracts, up from 177,758 in the previous period. Speculators have been short the USD since the last report in November 2012, when they were small longs.

Of the major currencies, the only currency the specs are short versus a long USD is the Japanese yen. Currently specs are short 122,891 yen contracts, however this is down from over 140K several weeks ago. The new Japanese government continues to threaten the yen, but some of the technical indicators suggest the yen is oversold.

Aside from the yen, specs are short the USD versus all the other currencies, and have a short Dollar Index position. There is even a modest long euro short USD position.

The biggest USD short position is against the Australian Dollar, 92,073 contracts. The A$ is regarded as a commodity currency along with the New Zealand and Canadian Dollars. In times of monetary expansion, commodities and commodity currencies are in vogue. Speculators are currently long over 200K commodity contracts versus a short USD.

 

1. US Dollar Index: Large specs made modest reduction in their short USD position, but are still short almost 12K contracts. Small specs are also short but not really a factor in this small market.

1. Euro (EUR/USD): Last week, the small specs flipped to the long side of the euro, and this week the large specs followed their lead. Large specs are now long the euro but only by about 6.2 K. The total OI in the euro is 251.8K when the option activity is included, but it is reduced to only 207.7K when the options are not included. The big options trade shows the importance of using the delta adjusted options when examining the COT report.

1. British Pound Sterling (GBP/USD): Both spec groups are long the BP by about a 2-to-1 ratio. The total long is 56.8K contracts. Market action after the end of this report has hurt the long and there may have been some selling from those longs.

1. Japanese Yen (JPY/USD): There has been an increase in the large OI, but a reduction of the short yen positions. Large specs remain a 3.68 ratio short and the small spec is a 3.0 short. Combined, their short position was reduced from 136K to 122.9K in this week report. Most of the increase in the OI came from spreading, most of which is option trade. Spreading is now 11.1% of the total open interest.

1. Swiss Franc (CHF/USD): Little change to be reported in the SF for the week. The small spec has a big long in the SF which amounts to 47.3% of the total market. His long amounts to about a 3.5 ratio long. The total spec long in the SF is about 28.5K.

1. Canadian Dollar (CAD/USD): Large specs remain a committed long in the C$, increasing their position to a 9.6 to 1 ratio long. Small specs are also long, but only by a 2.3 ratio. The total long increased slightly, to 88.9K. The C$ may have many friends, but, so far, it has been going nowhere.

1. New Zealand Dollar (NZD/USD): Both size specs are about 3 ratio longs in the kiwi. Though the OI declined by 5.6K, the total spec long decreased by about 900 contracts to 19.7K.

1. Australian Dollar (AUD/USD): It looks like the holiday week did not result in position changes in many of the currencies. This was the case in the A$. Large specs remain close to a 3 ratio long. Small specs are likewise long but did reduce their net long by about 5K. We wonder if last week's volatility did not result in some liquidation of the A$ positions.

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The COT Report reflects a condensed version of currency traders collective market votes as derived from the U.S. Commodity Futures Trading Commission’s weekly data output.*Any opinions, news, research, analyses, prices, or other information contained in this discussion post are provided as general market commentary, and do not constitute investment advice from CashBackForex and/or CashBackForexUSA