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Forex pairs in this Article » EUR/USD, USD/CHF, GBP/USD, USD/JPY (Bali) - According to the latest CFTC Commitments of Traders Report - week ending Tuesday, December 17 - investors continued to gain conviction in directional bets, notes Greg T. Moore, FX Strategist at TD Securities.

Key Quotes

"Total net outstanding contracts expanded to another high since June (to 326k from 311k). That level remains well below what was typical in the first half of the year however (400-500k)."

"Investors added to USD exposure v. all currencies except the EUR. On balance though, the implied USD position remained flat at USD17.2 bn as of Tuesday (ahead of the Fed meeting)."

"The jump in EUR long positioning was by far the biggest adjustment by value over the week, with net long contracts rising to 27.9k from 15.9k. The Fed-induced selloff in EUR/USD since then means we will likely see a much smaller long position in next week’s data."

"Speculators also continued to build larger short positions in the CAD, with net short contracts expanding to another extreme since April (to 65.5k from 57.5k)."

"Exposure to the other commodity currencies was reduced as well against the USD, with the AUD net short extending to 51.7k contracts (from 45.9k), and the NZD net long trimmed to 5.7k from 8.6k."

"The JPY short trade remained very popular, with net short contracts still hovering near record levels at 130.2k (after 129.7k last week). These extremes are vulnerable to a short squeeze, but fundamentals (like Fed tapering) continue to point to a justifiably higher USD/JPY."

"Positioning elsewhere among the majors was fairly steady, with the net long GBP position pared just slightly to 17.8k contracts (from 18.4k), and the CHF net long flat at 12.0k."

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