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

December 17, 2016

2 minute read

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

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.

Disclaimer

This post was originally published by Marc Chandler at his blog, MarcToMarket.com

Author

Marc Chandler

Marc Chandler has been covering the global capital markets in one fashion or another for more than 30 years, working at economic consulting firms and global investment banks.

After 14 years as the global head of currency strategy for Brown Brothers Harriman, Chandler joined Bannockburn Global Forex, as a managing partner and chief markets strategist as of October 1, 2018.

Disclaimer
Opinions expressed are solely of the author’s, based on current market conditions, and are subject to change without notice. These opinions are not intended to predict or guarantee the future performance of any currencies or markets. This material is for informational purposes only and should not be construed as research or as investment, legal or tax advice, nor should it be considered information sufficient upon which to base an investment decision. Further, this communication should not be deemed as a recommendation to invest or not to invest in any country or to undertake any specific position or transaction in any currency. There are risks associated with foreign currency investing, including but not limited to the use of leverage, which may accelerate the velocity of potential losses. Foreign currencies are subject to rapid price fluctuations due to adverse political, social and economic developments. These risks are greater for currencies in emerging markets than for those in more developed countries. Foreign currency transactions may not be suitable for all investors, depending on their financial sophistication and investment objectives. You should seek the services of an appropriate professional in connection with such matters. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete in its accuracy and cannot be guaranteed.