Smart Money Going Short USD, Long EUR

02/08/2011 1:00 am EST

Focus: FOREX

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that futures speculators continued to add to their short positions of the US dollar against the other major currencies while increasing long positions in favor of the euro. Non-commercial futures positions, those taken by hedge funds and large speculators, were overall net short the US dollar by $24.9 billion against other major currencies as of February 1. This is a rise from the total short position of $18.2 billion on January 25, according to the CFTC data and calculations by Reuters, which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar, and Swiss franc.

Euro Trading

Currency speculators added to their net long positions in the euro against the US dollar for the third week in a row with a total of 39,934 long positions as of February 1. This is a sharp turnaround for euro positions that were long by 22,901 contracts on January 25 and were short by 45,182 contracts as recently as January 11. The graph below overlays the EUR/USD spot closing price as of the Tuesday of COT trader positions reporting.

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The COT report is published every Friday by the CFTC 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 US dollar, whereas 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.

British Pound

Speculators increased their net long British pound sterling positions as of February 1 to their highest position since November 16. Pound sterling contracts rose to a total of 22,659 long positions after totaling 7,888 long positions as of January 25.

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NEXT: Newest Data for Yen, Swiss Franc, and More

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Japanese Yen

The Japanese yen net long contracts edged lower as of February 1 to a total of 31,481 long contracts. Yen positions had totaled 32,218 net long contracts as reported on January 25.

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Swiss Franc

Swiss franc long positions increased after drifting lower for a three straight weeks to a total of 10,441 long contracts as of February 1. Franc contracts totaled a net of 6,594 long contracts on January 25.

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Canadian Dollar

The Canadian dollar positions edged higher to a total of 33,814 net long contracts after two straight weeks of declines. CAD long positions had registered 31,719 net longs on January 25.

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NEXT: Latest on Aussie and New Zealand Dollar

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Australian Dollar
 
The Australian dollar long positions rose back higher from the previous week. AUD contracts totaled a net amount of 60,077 long contracts as of February 1 from 45,458 long contracts on January 25.

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New Zealand Dollar

New Zealand dollar futures positions rose to a total of 10,270 long positions as of February 1. NZD large speculator long positions had fallen the previous week to a total of 8,627 long contracts on January 25.

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Summary as of February 1, 2011: Large Speculators Net Positions vs. US Dollar

  • Euro: +39,934
  • British Pound: +22,659
  • Japanese yen: +31,481
  • Swiss franc: +10,441
  • Canadian dollar: +33,814
  • Australian dollar: +60,077
  • New Zealand dollar: +10,270

You can find the raw data from the Commitment of Traders Report at the CFTC Web site here.

By the Staff at CountingPips.com

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