Yen Bears Press While Canadian Bulls Charge


It may prove to be among the largest weekly adjustments to speculative positioning in the currency futures this year. In the CFTC reporting week ending July 11, speculators added 34.2k contracts to their gross short position, lifting it to 152.9k contracts. This gross short  position is the largest in two years. The gross long position was trimmed by almost 3k contracts to 40.8k. The net short speculative position jumped to 112.1k contracts from 75k in the previous week.  

The bearishness toward the yen was matched by the bullish sentiment toward the other currency futures. Speculators reduced gross short positions in all of the other currency futures we track.   

The bulls preferred the Canadian dollar the most. They grew their gross long position by 11.8k contracts to 46.1k, while squeezing the bears to cover 19k contracts, leaving 54.7k. The net short position was reduced for the seventh consecutive week, and could very well have switched to a net long position, given the surge following the Bank of Canada meeting a day after the reporting period ended.  

The other significant position adjustment was the short-covering in sterling. The gross short position fell by 11k contracts to 70.8k. It has been more than halved since late April. The gross long position of 46.6k contracts (a lost of 7.4k contracts on the week) is near the 12 week average.  

Although the euro gross positions were changed by less than 5k contracts, the net long position edged to a new six-year high of 83.8k contracts. The record was set in May 2007 around 120k. Interestingly, the record net short yen position was achieved a month later near 188k contracts.  

With the slightest of gross position adjustments, speculators now have a net long Swiss franc position for the first time since the end of last year. Among the currencies we track, speculators are only net short the yen, sterling and the Canadian dollar. Speculators have built their largest net long Mexican peso position in four years (97.9k contracts).  

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