Following six straight weeks of improvement in the euro futures positions that coincided with a rise for the EUR/USD pair over 1.3300, forex speculators have increased their short positions for the euro against the US dollar for a second consecutive week. The latest Commitments of Traders (COT), released by the Chicago Mercantile Exchange, showed that non-commercial futures positions, those taken by hedge funds and large speculators, were net short the euro against the U.S. dollar by -21,603 contracts as of August 24th. This is an increase of almost 7,000 short contracts after speculators were net short the euro by -14,627 contracts on August 17th. Euro short positions had shown improvement for six consecutive weeks before the recent turnaround and marked their best showing on August 10th since the week of December 8, 2009 when positions were short by -511 contracts.
The COT report is published every Friday by the Chicago Mercantile Exchange (CME) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar.
The euro and the British pound sterling were the only major currencies on the short side against the dollar last week in the CME futures market. The Australian dollar, New Zealand dollar, Japanese yen, Swiss franc, Canadian dollar and Mexican peso all continued to have a net long amount of contracts.
The British pound sterling numbered -4,365 short positions as of August 24th after being on the short side on August 17th with -4,431 positions. Pound sterling positions had improved for five straight weeks before last week’s decline that saw British pound futures reach 5,021 long positions on August 10th.
The Japanese yen net long contracts edged higher last week to 51,069 from 49,969 net long contracts reported on August 17th. Yen positions have continued to stay around the +50,000 level for the past four weeks after being short by -65,612 contracts on May 4th.
Swiss franc long positions increased for a second straight week to 13,868 long contracts as of August 24th after rising to 11,750 long contracts the week prior.
The Australian dollar futures positions declined to a net amount of 47,017 long contracts as of August 24th following six straight weeks of increases. New Zealand dollar futures positions edged lower for third straight week with 10,683 long contracts after a total of 12,139 long contracts as of August 17th.
The Canadian dollar long positions fell for a second consecutive week to a net of 16,147 long contracts after 29,514 net longs the week. Mexican peso long contracts also dipped for a second week after gaining for five straight weeks to 59,370 longs from 70,553 longs the week prior.
COT Data Summary as of August 24th, 2010
Large Speculators Net Positions vs. the US Dollar
Euro: 21,603 short contracts from 14,627 shorts on August 17th
British pound sterling: 4,365 short contracts from 4,431 short
Australian dollar: 47,017 long contracts from 57,697
Canadian dollar: 16,147 long contracts from 29,514
Japanese yen: 51,069 long contracts from 49,969
Mexican peso: 59,370 long contracts from 70,553
New Zealand dollar: 10,683 long contracts from 12,139
Swiss franc: 13,868 long contracts from 11,750