COT Report Shows Record EUR Short Bias

12/08/2011 6:00 am EST

Focus: FOREX

The most recent COT report shows that large speculators have increased their short euro holdings to record annual levels, while also favoring the dollar over a range of other major currencies.

The latest Commitments of Traders (COT) report, released last Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators heavily increased their bullish bets in favor of the US dollar and pushed their bearish bets for the euro to the highest level since June 2010.

Non-commercial futures traders, usually hedge funds and large speculators, increased their total US dollar long positions to $18.04 billion on November 29 from a total long position of $12.11 billion on November 22, according to the COT data and calculations by Reuters, which calculates the dollar positions against the euro (EUR), British pound (GBP), Japanese yen (JPY), Australian dollar (AUD), Canadian dollar (CAD), and Swiss franc (CHF).

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 (USD), 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.

The below graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

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EUR/USD

Currency speculators continued to add to their short bets for the euro against the US dollar for a third consecutive week as of November 29. Short euro positions rose to a total of 104,302 net contracts from the previous week’s total of 85,068 net short contracts.

Last week’s short position is a new low level for euro positions all year and the highest short level since June 8, 2010, when short euro positions totaled 111,945.

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NEXT: Latest COT Data for GBP/USD, USD/JPY, and More

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GBP/USD

Currency speculators increased their bearish bets against the British pound sterling for third consecutive week as of November 29. British pound positions fell to a total of 46,660 short positions following a total of 36,634 net short positions registered on November 22. The decline in British pound positions marked the lowest level since November 1.

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USD/JPY

The Japanese yen net long speculative contracts dipped last week following three consecutive weeks of increases. Yen long positions fell to a total of 40,547 net long contracts reported on November 29 following a total of 43,180 net long contracts that were reported on November 22.

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NEXT: Latest COT Data for USD/CHF, USD/CAD, and More

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USD/CHF 

Swiss franc positions dropped for a third consecutive week and to a new low level all year against the dollar last week. Speculator positions for the Swiss currency futures edged down to a total of 9,327 net short contracts following a total of 5,870 net short contracts as of November 22.

The Swiss currency has seen limited strength in forex trading since the Swiss National Bank initiated a policy to stem the strength of their currency.

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USD/CAD

Canadian dollar positions edged lower for a fourth consecutive week as of November 29. CAD net contracts decreased to a total of 26,869 net short contracts as of November 29 following a total of 22,144 short contracts reported on November 22.

CAD positions are now at their lowest level of the year, surpassing the previous low that was reached on October 11 when net short positions fell to 24,913.

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NEXT: Latest COT Data for AUD/USD, NZD/USD, and More

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AUD/USD

Australian dollar long positions fell lower for the third consecutive week as of November 29. Australian dollar positions declined to a total net amount of 12,542 long contracts following a total of 17,960 net long contracts reported as of November 22.

AUD speculative positions are now at their lowest level since October 11 when long positions totaled 10,753.

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NZD/USD

New Zealand dollar (NZD) futures speculator positions fell sharply last week for a third consecutive week. NZD contracts declined to a total of 3,718 net long contracts as of November 29 following a total of 7,916 net long contracts registered on November 22.

Last week’s decline brought long New Zealand dollar positions to the lowest level since April 5 when positions equaled 2,695 long contracts.

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In summary, here are the large speculators’ net positions versus the US dollar last week:

  • EUR: -104,302
  • GBP: -46,660
  • JPY: +40,547
  • CHF: -9,327
  • CAD: -26,869
  • AUD: +12,542
  • NZD: +3,718

By the Staff at Counting Pips.com

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