Euro And Pound Remain Favored Shorts Of Currency Specs

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Includes: FXA, FXB, FXC, FXE, FXF, FXY, UDN, UUP
by: Ralph Shell

Currency speculators remain bearish on the future price of the euro and the pound versus the U.S. dollar. Specs are now short 107,464 euro contracts and 88,757 contracts of the pound. Each euro contract is worth about $167,300, and the pound contract is worth about $96,000. Specs also are long almost 50K contracts of the dollar Index. The only significant U.S. dollar short position is versus a spec long in the Japanese yen of 37,855 contracts.

The total net USD long position this week is 212,209 contracts, up from 198,397 in the prior week. The total open interest in the eight contracts reviewed was a big increase, 120,831 contracts. The increases were in the pound, the Australian dollar the Canadian dollar and the euro. Much of the increase in the open interest was commercials on both side of the market.

Usually the large and the small specs are on the same side of the market once a trend is established. Currently this is the situation in the DI, the euro and the pound where all parties are short. Specs are going different ways in the yen large specs are long, the Canadian dollar large specs are short, the Australian dollar large specs are long and adding to the position, and the New Zealand dollar where the large specs are long. Large specs are generally the most astute traders, and it is important when they flip from a long to a short or vice versa.

The only large spec group to flip during the week was in the Swiss franc where it flipped to the short side of the franc. Does this mean the SNB is going to attempt further weakening in the franc, or is the currency merely going to sink further should the euro fall?

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.