Overview: There was an increase in the open interest (NYSE:OI) during the week by 11,585 contracts. Within that total are some mixed trends. The euro had a significant increase 32,488 in the OI, and the DI had a 8,749 increase, quite large for the size of that contract. There was also over a 7,000 increase in the C$ open interest. The OI went down almost 24k contracts in the yen, and over 8k contracts in the A$.
The total USD short position was reduced during the week from 178,565 down to 113,624. The only position flip during the period was in the DI, where the large spec aggressively moved to the long side. In the euro the large specs were heavy sellers and and expanded their short in the euro to almost 50,000 contracts. Spec shorts in the pound covered some of their positions. There was significant position shifts in the yen as the yen longs sold over 20,000 contracts. In the commodity currencies, the specs continued to buy more C$s but did cut back on their long A$.
The euro trade is interesting. In one of our daily currency comments earlier in the week, we wondered who the buyers were in the euro, and how deep were their pockets as the OI was building sharply under the 1.30 handle. By the end of the week, the market rallied smartly and these buyers had big profits. I am only an outside observer but I would guess that some of the euro buying was done by the Chinese or those who had knowledge of the size of the Chinese intervention to buy European bonds, which thereby supported the euro.
Small specs had the biggest long positions in the SF, 46.2%, the C$, at 35.4%, and the A$, 28.6%. There largest short positions were in the pound, 28.3%, the yen 27.7% and the euro, 24.6%.
Large specs are the biggest participants in the two small markets, the DI, and the NZ$, and usually have very large positions on both sides of the market. The large specs biggest positions remain in the commodity currencies. They own 53.6% of the A$, and 51.5% of the C$. On the short side of the market they are in the euro, 34.6% and the pound, 29.0%.