Bulls and Bears See Opportunity in the Currency Futures

During the CFTC’s Commitment of Traders week ending October 4, speculators took on risk.  Of the sixteen gross currency positions we track, speculators added to their exposure in all but five.  Bulls and bears saw opportunity.  

The bears were decisive. Of the significant position adjustments (a change in gross position by at least 10k contracts), two were adding to gross shorts (euro and sterling).  The New Zealand dollar and Mexican peso were the only two where the bears did not add to gross short position. 

The bulls did not extend gross long positions in three of the eight currencies:  the Canadian and New Zealand dollars and the Mexican peso.  What the disaggregated view reveals is that the New Zealand dollar and Mexican peso were the exceptions to the general pattern.  Speculators moved to the sidelines in both currencies.   That leaves the 2k contract liquidation of gross long Canadian dollar position to be the sole exception of speculators adding to positions.  

The gross short euro position expanded by 11.2k contracts to 187.7k.  It is the largest in a month. The gross sterling position jumped 18.4k contract to 154.3k, a new record.  It has risen by 31k over the past three reporting periods.  A week after the June referendum, the gross short position stood at 94.8k contracts. 

The bulls made only one significant adjustment to their currency futures position.  It was the Australian dollar.  They added 10.7k contracts to lift the gross long position to 73.5k contracts. The gross short position hardly changed, rising 1.7k contracts to 46.9k.  The result was an increase in the net long speculative Aussie position too 23.9k contracts from 15.0k.  Two weeks ago, the net speculative position was long by 6.8k contracts.  

Speculators cut exposure in US 10-year Treasury futures.  The bulls liquidated 29.4k contracts, leaving a gross long position of 688.9k contracts.  The bears covered 16.2k contracts, reducing the gross short position to 561.8k contracts.  The results of these gross position adjustments was a reduction in the net long position to 127.2k from 140.4k contracts. 

Speculators turned more bullish light sweet crude oil.  The net long speculative position increased by 71.3k contracts to 363k, a five-month high.  The gross long position grew 27.5k contracts to 571.3k.  The gross short position fell 43.8k to 208.3k contracts.    

4-Oct      Commitment of Traders
Net  Prior  Gross Long Change Gross Short  Change
Euro -82.1 -76.0 105.6 5.1 187.7 11.2
Yen 68.7 68.8 102.0 4.6 33.3 4.8
Sterling -97.6 -87.7 56.8 8.6 154.3 18.4
Swiss Franc -2.9 -6.0 19.3 6.5 22.2 3.5
C$ -14.1 -11.6 32.6 -2.0 46.7 0.5
A$ 23.9 15.0 73.5 10.7 49.6 1.7
NZ$ -7.8 -6.8 32.2 -1.9 40.1 -9.0
Mexican Peso -85.9 -85.9 22.4 -2.5 108.3 -2.5
(CFTC, Bloomberg) Speculative positions in 000’s of contracts

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