by George Dorgan
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Summary:
Swiss Franc Speculators are reducing their net short Euro positions, since Draghi’s comments on inflation. Apparently not only against the dollar but also against the Swiss Franc. This also means that the euro zone may be target real money (like purchases of stocks, real estate and bonds) instead of Switzerland. This makes both European stocks and a Euro long FX position interesting. With a stronger euro, purchases of Swiss stocks could also be an idea. The net long CHF position of against USD did barely change. It is not +1.3K positions. The dollar got stronger against the euro this week. With potential interest hikes, real money in the form of cash seems to flow into USD. This continues to be a drag on US exports and the profits of U.S. based companies. This is the reason why we prefer European stocks. Summer vacations have mostly ended. The news stream has picked up. Yet speculators have been mostly reluctant to make meaningful changes in their exposure to the currency futures. Reduction in short Euro positions There are a few notable exceptions. First, over the past several weeks, speculators have reduced gross short euro positions by more than 20% since the end of July. It stands at 173.3k contracts, after the bears covered 16.
Topics:
George Dorgan considers the following as important: Commitment of Traders, Featured, FX Trends, newsletter, Speculative Positions
This could be interesting, too:
Swiss Franc Speculators are reducing their net short Euro positions, since Draghi’s comments on inflation. Apparently not only against the dollar but also against the Swiss Franc. This also means that the euro zone may be target real money (like purchases of stocks, real estate and bonds) instead of Switzerland. This makes both European stocks and a Euro long FX position interesting. With a stronger euro, purchases of Swiss stocks could also be an idea. The net long CHF position of against USD did barely change. It is not +1.3K positions. The dollar got stronger against the euro this week. With potential interest hikes, real money in the form of cash seems to flow into USD. This continues to be a drag on US exports and the profits of U.S. based companies. This is the reason why we prefer European stocks. Summer vacations have mostly ended. The news stream has picked up. Yet speculators have been mostly reluctant to make meaningful changes in their exposure to the currency futures. Reduction in short Euro positions There are a few notable exceptions. First, over the past several weeks, speculators have reduced gross short euro positions by more than 20% since the end of July. It stands at 173.3k contracts, after the bears covered 16.
Topics:
George Dorgan considers the following as important: Commitment of Traders, Featured, FX Trends, newsletter, Speculative Positions
This could be interesting, too:
Eamonn Sheridan writes CHF traders note – Two Swiss National Bank speakers due Thursday, November 21
Charles Hugh Smith writes How Do We Fix the Collapse of Quality?
Marc Chandler writes Sterling and Gilts Pressed Lower by Firmer CPI
Michael Lebowitz writes Trump Tariffs Are Inflationary Claim The Experts
Swiss Franc
Speculators are reducing their net short Euro positions, since Draghi’s comments on inflation. Apparently not only against the dollar but also against the Swiss Franc. This also means that the euro zone may be target real money (like purchases of stocks, real estate and bonds) instead of Switzerland. This makes both European stocks and a Euro long FX position interesting. With a stronger euro, purchases of Swiss stocks could also be an idea.
The net long CHF position of against USD did barely change. It is not +1.3K positions. The dollar got stronger against the euro this week. With potential interest hikes, real money in the form of cash seems to flow into USD. This continues to be a drag on US exports and the profits of U.S. based companies. This is the reason why we prefer European stocks.
Summer vacations have mostly ended. The news stream has picked up. Yet speculators have been mostly reluctant to make meaningful changes in their exposure to the currency futures.
Reduction in short Euro positions
There are a few notable exceptions. First, over the past several weeks, speculators have reduced gross short euro positions by more than 20% since the end of July. It stands at 173.3k contracts, after the bears covered 16.7k contracts in the CFTC reporting period ending September 13.
Sterling
Although the position adjustments in sterling has been modest, the market has turned and has stopped extending gross and net short positions. Both have fallen for two consecutive reporting period from record levels. The gross short speculative position fell by 5.5k contracts to 123.2k contracts, roughly the same amount that was covered in the previous week. The bottom pickers have slowly entered the market. The gross long position bottomed in mid-July near 28k contracts. It edged up 1.6k contracts in the latest reporting period to 40.1k contracts. The net short sterling position of 82.8k contracts surpassed the euro (net short 81.5k contracts) to have the dubious honor of the largest such speculative position.
Canadian Dollar and Mexican Peso
If the bears were pulling back in the euro, they were showing their claws on the Mexican peso. The gross short position rose by 10.4k contracts, after increasing by 22k contracts the previous reporting period. At 85.7k contracts, the gross short position is the largest since April. The net short peso position has more than doubled to 65.7k contracts in the past two weeks.
The Canadian dollar joined the Mexican peso as the two exceptions to the general move by speculators to cover short currency futures position. The bears added 5.5k contracts to their gross short position, lifting it to 28.7k contracts. Speculators also reduced exposure in the Australian and New Zealand dollars by liquidating gross longs and covering gross shorts, but total gross adjustment were less than 7.5k contracts.
Treasuries
The bears are slowly moving into ascendancy in the US 10-year Treasury note futures. They added another 14.6k contracts to lift it to 566.6k contracts. It has risen by about 145k contracts since the end of July. The bulls sold 22.2k contracts, leaving them with a gross long position of 635.2k contracts. The gross long position peaked in late-June a little over 720k contracts. The net position remains long, but it fell to 68.6k contracts from 104.8k.
Crude Oil
The speculative bears in the light sweet crude oil futures had second thoughts. After adding more than 50k contracts to the their gross short position in the previous reporting period, speculators covered 23.6k contracts in the most recent week. The gross short position now stands at 224.7k contracts. The bulls tread water and added 3.9k contacts to lift the gross long position to 538k These adjustments were reflected in the 27.5k contract increase in the net long position. It stands at 313.3k contracts.
| 13-Sept | Commitment of Traders | |||||
| Currency | Net | Prior | Gross Long | Change | Gross Short | Change |
| Euro | -81.5 | -92.6 | 91.8 | -5.5 | 173.3 | -16.7 |
| Yen | 56.8 | 54.5 | 86.1 | +2.2 | 29.3 | -0.2 |
| Sterling | -82.8 | -90.0 | 40.4 | +1.6 | 123.2 | -5.5 |
| Swiss Franc | 1.3 | 1.5 | 20.9 | -2.0 | 19.5 | -1.9 |
| C$ | 17.1 | 20.9 | 45.8 | +1.7 | 28.7 | +5.5 |
| A$ | 36.5 | 39.0 | 63.1 | -3.1 | 26.7 | -0.6 |
| NZ$ | 5.1 | 6.1 | 34.9 | -2.3 | 29.8 | -1.3 |
| Mexican Peso | -65.7 | -58.4 | 19.9 | +3.1 | 85.7 | +10.4 |
| U.S. Treasuries | 68.6 | -36.0 | 635.2 | -22.2 | 566.6 | +14.6 |
| Crude Oil | 313.3 | +27.5 | 538.0 | +3.9 | 224.7 | -23.6 |
| (CFTC, Bloomberg) Speculative positions in 000’s of contracts | ||||||