Bears Jump on the Euro, but Aussie Bulls may be Caught Leaning the Wrong Way

Speculators made several significant position adjustments in the CFTC reporting period ending 19 July. 

The euro bears added to their gross short position for the fourth consecutive week and for the ninth week in the past ten.  The 16.2k contract increase lifted the gross short position to 211.5k contracts, the largest since the first week of the year.

Even before the poor flash UK PMI readings, speculators in the futures market slashed gross long sterling positions.  The 12k-contract liquidation brought the gross long position to 28.0k contracts.  The gross short position edged 2.3k contracts higher to 102.3k.  The net short speculative position of 74.4k contracts, increased by 14.3k contracts on the week and is at the highest level since mid-June.

Speculators added to their gross long Australian dollar position by 15.7k contracts.  It was the fourth consecutive weekly increase.  The bears covered 1.5k  gross short contracts, leaving 28.2k contracts. The net long position doubled to 33.4k contracts from 16.2k.  At the end of June it stood at net short 7k contracts.  

The pattern that emerged in the previous report continued with this one.  Speculators are more bearish the majors and more bullish the dollar-bloc and Mexican peso.  Previously this was evident in the adjustments of both gross long and gross short positions.  In the most recent period it was manifest only in the gross short positions.   Speculators added to gross short positions in the euro, yen, sterling, and the Swiss franc.  They reduced their gross short exposures to the Canadian, Australian and New Zealand dollars, and the Mexican peso.

For the fourth week in a row speculators reduced gross long and gross short positions in the 10-year Treasury notes.  The bull liquidated 55k long contracts, leaving 592.6k.  The bears covered 33k gross short contracts to 483.2k.  The net position fell to 109.4k from 131.4k contracts.

In contrast, the bulls and bears added to their exposure to light sweet crude oil futures.  The gross long position rose 9.4k contracts to 525.6k, while the gross short position increased by 14.6k contracts to 236k.  Despite more longs and shorts, the net position fell 5.2k contracts to 289.6k.  

19-Jul               Commitment of Traders
Net  Prior  Gross Long Change Gross Short  Change
Euro -99.0 -87.7 115.8 3.9 211.5 16.2
Yen 39.4 47.5 79.9 -5.5 40.5 2.7
Sterling -74.4 -60.1 28.0 -12.0 102.3 2.3
Swiss Franc 4.7 6.7 23.2 -0.1 18.5 1.9
C$ 22.1 17.2 43.1 3.1 21.0 -1.8
A$ 33.4 16.2 61.6 15.7 28.2 -1.5
NZ$ 2.2 1.0 29.2 -2.5 27.0 -3.7
Mexican Peso -39.4 -37.2 24.7 -4.0 64.0 -1.8
source: CFTC and Bloomberg in thousands of futures contracts)

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