Net Speculative Long in the USD Sharply Lower


Active Trader
Apr 19, 2012
Cork, Ireland
CFTC Commitments of Traders (COT) Report, 27 November 2012. The net speculative position in the USD remains long, but only 3052 contracts, down from 52, 244 contracts last week. Within the composite number are some conflicting trends.

The commodity currencies remain a favorite long, and the specs upped their ante. The total long in the C$, A$, and the NZ$ increased to 190K contracts, up from 168.7 in the previous week.

In the euro, and the peg-related Swiss Franc, short-covering was the feature for the week. The total spec short in the euro was down to 87.9 from 114.7 in the previous week. In the SF, specs are buyers and the small spec flipped from the short to a small long position. Combined, the specs went from a short of 15.7K to a long of 529 contracts.

Trade in the British Pound has not been too lively, but during the period specs added to their long. The total spec long in the pound is now up to 28.5K.
[What is the CFTC Commitments of Traders (COT) Report?]

  • US Dollar Index: There was about a 10% reduction in the OI, as the large spec, the dominant player in this market, reduced positions. He took off 2.7K of his longs and reduced shorts by 4.3K. The result was a total spec long of the DI being increased to 8.0K from 6.5 the prior week.
  • Euro (EUR/USD): Large specs actively covered shorts during the period, reducing their net short to 72.3K down from 94.8 in the previous week. Large specs remain a 3-to-1 short. Despite buying over 3.0K and reducing shorts by 1.3K, the small specs remains short a little over 15K contracts. The short-covering continued after the end of the period with the OI in futures going down over 29K. (The short-covering continued.) Spreading, which includes the options trade is quite large, 10.6% of the total OI.
  • British Pound Sterling (GBP/USD): The OI went up by 7.8K, and the speculator increased his sterling long from 12.2K to 28.5K. As the specs increased their long position, there was a modest rally in the pound enabling it to conquer the top side of 1.60. The appeal to the specs for the long side of the pound seems elusive.
  • Japanese Yen (JPY/USD): The explosive growth in the spec short yen position keeps growing. The OI was up over 10% and now totals 238.3K. Both size specs are short by about a 4 to 1 ratio. Despite the aggressive selling of the yen, the recently-arrived shorts have not been making money as the market has gained nominally. Spreading OI is up to 7.3% of the total market. Some of the new buying is prompted by anticipation the December 16th election will put Liberal Democratic Party Abe, who vows to increase the money supply, into office.
  • Swiss Franc (CHF/USD): There has been a change of attitude in the SF as the small spec has flipped to the long side of the SF, and the commercial has flipped to the short side. Large specs remain short the Swissie but reduced the net short by 9.1K contracts. The market share of the small spec positions is bigger the the large spec.
  • Canadian Dollar (CAD/USD): There was a slight addition to the specs net long in the C$ to 78.9K, up from 75.3K. The large spec is a very unbalanced 7.8 ratio long, but this week the buying was done by the small specs. This pair has been stuck in a narrow range, rewarding neither long or short.
  • New Zealand Dollar (NZD/USD): Speculators continue to add to their long positions in this small market. The small spec is now a 2.6 ratio long and the large spec is a 7.4 to 1 long. Combined specs are long 84.5% of this very small market.
  • Australian Dollar (AUD/USD): There was a surge of spec-buying in the Aussie during the period. The combined spec long surged up to 89.8K from 73.8 in the previous period. Large specs, though, are only a 2.4-to-1 long so they have room to buy some more. Market action has favored the long, but only slightly.

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