Currency Specs Continue To Increase U.S. Dollar Longs

Includes: FXB, FXC, FXE, UDN, UUP
by: Ralph Shell

Currency markets felt like - and traded like - the speculator was coming out of its USD longs this past week. The COT report, data only through Tuesday, shows this was not the case. The total USD long position increased in our report from 212,209 contracts to 223,416 contracts. Again the biggest short position was in the euro, 99.6K contracts, and in the pound, 81.7K contracts.

The biggest net change was in the Canadian dollar where the large specs bought the USD and sold the Canadian. Large spec, possibly hedge funds, are typically long, not short the Canadian, and the loonie finished the week on big gains versus the USD.

Late week rally of currencies versus the USD will probably show some spec liquidation did occur late in the week, we suspect. This will not show up until the next report.

A quandary for the big specs, the balance of the month is ... what will be Europe's Grand Solution to its debt crises and how will this impact the relative value of the different currencies?

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