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Forex pairs in this Article » EUR/USD, USD/CHF, GBP/USD, USD/JPY (Bali) - The CFTC Commitments of Traders Report, for the week ending Tuesday, December 31, saw investors make minor adjustments to positions held through December, notes the FX team at TD Securites.

Key Quotes

"Total net outstanding contracts were essentially stable over the prior week, holding up near the highest level of the past six months (to 337k from 341k)."

"That suggests speculators are heading into 2014 with greater conviction in directional bets than we have seen since May."

"Implied USD long exposure was trimmed modestly to USD16.3bn from USD17.6bn, mostly as a result of trimmed JPY short positions."

"The reduction in net JPY shorts—to a still very extreme 135.2k contracts from 143.8k—was the largest adjustment by value, with a shift that amounts to USD1.2bn. Despite the reduced short exposure however, net positioning is still close to record levels that are at risk of a short squeeze."

"Investors boosted GBP long exposure to the highest level since January 2013 (to 22.8k contracts from 14.4k). The selloff in GBP/USD since the turn of the year likely means a chunk of those positions will have been squeezed out, as we should see in next week’s report."

§ Elsewhere among the majors, position adjustments were subtle. The net long EUR position remained steady at 30.6k (32.2k last), roughly where it has been for the past two weeks. Similarly, the CHF net long remained stable at 10.9k, where it has been for most of December.

"Commodity currency positioning also only saw very small adjustments, with the CAD net short holding at 58.0k (58.4k last); the AUD net short stable at 57.4k (54.2k last); and the small NZD net long steady at 6.7k (6.5k last)."

"The MXN net long was cut modestly to 15.6k contracts from 20.2k, also in line with positioning that we’ve seen over the past month."
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