Forex Flash: CFTC observations - BBH

Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman has taken a look at this weeks latest CFTC report and has made the following observations.

1) For the second consecutive week, Chandler sees that the gross long positions in all the currency futures we trade was reduced. He feels that it is not simply a matter of poor news elsewhere any more, but the dollar has responded to positive US economic data.

2) He notes that in the previous reporting period, the gross short positions add to except the euro and yen. He writes, “In the latest period there was an increase in the gross short position in all the currency futures.”

3) Chandler sees that of the 14 gross positions that he tracks, there was a greater than 10k swing in five currencies. Further, the gross long euro position was cut by 11.5k contracts, helping to lift the gross position to its largest since the middle of December. He writes, “The bears added 12.6k contracts their short position in sterling, which at 79.9k is the largest since late 2011. There was a 22.6k increase in the gross short Canadian dollar contracts. Over the past four reporting periods, the gross short position has soared from 12.5k to 86.2k contracts. The gross long Australian dollar and Mexican peso positions were cut by around 17.5k contracts. These are the only two currency futures were the net position remains long.”

4) The net short Canadian dollar position is the largest since March 2007.

5) Although the net speculative position is still long the Australian dollar, Chandler notes that it has been reduced sharply here in 2013. He writes, “In mid-Dec, the net long position stood at 103k. As of the latest reporting period, it has been cut to a mere 7.1k contracts, the smallest since last July.”