Specs Cover Euro Shorts for Second Week and Continue to Amass Short Yen

Leadership marc

The most powerful speculative force in the currency futures is the turn of sentiment toward the Japanese yen.   The bears added another 17.6k contracts to lift the gross short position to 125.9k contracts. It is risen in 10 of the last 11 weeks, over which time is has tripled.

The gross longs peaked in early October at 102k contracts.  With the nearly 12k contract liquidation, the gross long position now stands at 62.4k contracts.  The net short position swell to 63.4 k contracts from 33.9k, the largest of the year,  As recently as early November speculators were net long 43k contracts.

While the speculative adjustment in the yen seems contemporaneous with spot movement, the euro seems a bit different.  Rather than go with the trend, speculators have been covering shorts.  In the CFTC reporting period ending December 13, they covered 26.8k contracts and the week before they covered 18.4k contracts.  Speculators are still short 211.1k contracts.

Other speculative currency adjustments were minor.  Speculators mostly trimmed gross long currency futures positions, with the euro the only exception.  Speculators mostly added to gross long dollar-bloc and peso position.  The Australian dollar was the only exception.   Speculators also added to the gross short dollar-bloc currency futures .  Again the Australian dollar was the lone exception.

The net short US Treasury note futures position rose to 268.4k contracts from 228.6k.  The gross short position increased by 9.3k contracts to a new record 720.4k contracts.  The bigger adjustment was the liquidation by liquidation of 30.5k long contracts, reducing the gross long position to 452l contracts.

While the bears are in control of the Treasury market, the bulls had the oil market.  The bulls added 25k contracts to the gross long position, taking it to 614.8k contracts, which is a new record.  The bears covered 10% of their gross shorts to give leave 192k contracts.

13-Dec      Commitment of Traders
Net  Prior  Gross Long Change Gross Short  Change
Euro -87.5 -114.6 123.6 0.2 211.1 -26.8
Yen -63.4 -33.9 62.4 -11.9 125.9 17.6
Sterling -72.3 -77.2 40.5 -2.7 112.9 7.5
Swiss Franc -25.3 -25.4 5.6 -4.3 30.9 -4.4
C$ -21.9 -18.2 24.8 2.5 45.9 6.2
A$ 13.5 20.9 40.3 -8.0 26.8 -0.6
NZ$ -3.7 -4.0 29.4 1.8 33.1 1.5
Mexican Peso -57.7 -54.1 19.0 0.4 76.7 4.0
(CFTC, Bloomberg) Speculative positions in 000’s of contracts