COT Report Shows 2 Weakest Currencies

03/14/2012 6:00 am EST

Focus: FOREX

The most recent COT data shows that non-commercial traders have boosted US dollar long positions and are heavily short the euro and yen against the dollar, explains the staff at CountingPips.com.

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators increased their overall US dollar long positions last week, while Japanese yen positions fell sharply for a fifth consecutive week and declined to their lowest level since April 2011.

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 trying to gauge investor sentiment and looking for potential changes in the direction of a currency or commodity.

See related: Trading Forex Using the COT Report

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 positions expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

Non-commercial futures traders, usually hedge funds and large speculators, added to their short positions in the euro (EUR), British pound sterling (GBP), Japanese yen (JPY), and Swiss franc (CHF), while also trimming their long positions in the Australian dollar (AUD) and New Zealand dollar (NZD).

The Canadian dollar (CAD) and the Mexican peso (MXN) saw higher long positions directly against the US dollar (USD) with both currencies showing multiple weekly gains.

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Euro (EUR)

Currency speculators increased their euro short positions after sentiment for the euro currency had improved for two consecutive weeks. Euro net-short positions rose to 116,473 contracts against the currency on March 6 from the previous week's total of 109,674 net-short contracts.

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British Pound (GBP)

British pound sterling positions fell back as short positions increased after two weeks of improvements and seeing their best position since September, according to the data as of March 6. British pound positions saw a total of 37,099 net-short positions on March 6 following a total of 23,235 net-short positions registered on February 28. British pound sterling positions were at their best level on February 28 since September 6, when positions equaled 13,220 short contracts.

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NEXT: Japanese Yen, Swiss Franc, Canadian Dollar, and More

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Japanese Yen (JPY)

The Japanese yen speculative contracts continued their downward trend last week to fall for a fifth consecutive week and decline to their lowest level since April 2011. Yen positions dropped to a total of 19,358 net-short contracts reported on March 6 following a total of 1,203 net-short contracts on February 28.

Yen speculative positions, now in short territory for second straight week, are at their lowest level since April 26, when positions totaled 36,997 short contracts.

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Swiss Franc (CHF)

Swiss franc speculator positions were virtually unchanged for the third consecutive week last week. Speculator positions for the Swiss currency futures registered a total of 19,478 net-short contracts on March 6 following a total of 19,391 net-short contracts as of February 28.

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Canadian Dollar (CAD)

Canadian dollar positions rose higher for a fifth consecutive week and are at their highest level since August. Canadian dollar positions rose to a total of 26,032 net-long contracts as of March 6 following a total of 22,480 long contracts that were reported for February 28. CAD positions are now at their highest position since August 2, 2011, when long contracts equaled 41,037.

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NEXT: Australian Dollar, Summary of All Major Currencies

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Australian Dollar (AUD)

Australian dollar long positions declined following two consecutive weekly increases. Australian dollar positions fell to a total net amount of 61,720 long contracts on March 6 after totaling 78,201 net-long contracts reported as of February 28.

The AUD speculative positions on February 28 were at their highest level since Australian dollar long positions totaled 81,438 on July 26, 2011.

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COT Currency Data Summary as of March 6, 2012

Large Speculators Net Positions vs. the US Dollar:

  • EUR: -116,473
  • GBP: -37,099
  • JPY: -19,358
  • CHF: -19,478
  • CAD: +26,032
  • AUD: +61,720

By the Staff at CountingPips.com

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