Tuesday, 23 September 2014

Specs Extend USD Long Position as Sept Futures Contracts Expire

There was heavy contract liquidation in the September futures contracts, and in the liquidation period the specs added to the long USD position.  They have taken the total long position up to 423,924 contracts, the biggest long position since July 16th of 2013.  The largest USD long and spec short remains in the euro, 195K, and the yen, 134K.  There was also a big increase in the USD long position in the DI, which is probably related to the expiration of the September contracts.

All of the commodity currencies lost their strength against the USD, as the buying in the USD over whelmed  the Canadian, New Zealand and Australian Dollar.  In the NZD and the CAD, specs flipped to the short side.  Their biggest long position had been in the AUD, and this was reduced from almost 40K contracts to 7.9K.  The combined spec long position in the commodity currencies is down to 3K, from a high of over 91k at the end of July 2014.

The currency with the largest amount of liquidation has been the British pound.  The fevored trade in the pound has taken the OI to over 300K.  On a weekly basis that made the trade in the pound bigger than that in the yen.  No longer is this the case as the remaining OI in the pound is about 186K contracts and the yen OI was about  250K   Specs are now small shorts in the pound.  With the uncertainty of the Scottish election over, good fundamental economic news in the UK could turn the pound higher, it would seem.

      –  US Dollar Index: There was a large increase in the spec long position of the DI as the total went from 40K to 61K.  Since there was only a small increase in the OI, this probably means it was adjustments during the close of trading in the Sept contract and probably not too meaningful.  The activity was entirely in the large spec positions, where the position short position was reduced.  This would suggest the large specs were short the DI and long the components of the Index, and covered the positions at expiration. 


      –  Euro (EUR/USD):  There was big, big liquidation of the OI in the euro which took the spec short position down to 195K from 211.7K last week.  Total liquidation was 87.7 of which the spreading/option category amounted to 39K.  There was also heavy liquidation on both sides of the commercial positions.  This means there has been a heavy trade in covered options.  Large specs are not a 2.8 ratio short and the small specs are a 2.4 short.

      –  British Pound Sterling (GBP/USD):  The absolute amount of liquidation in the pound was 121.2K, far exceeding the total liquidated in the euro, 87.7K where there is a much larger OI.  The large spec is still keeping a token long, while the small spec has continued to sell.  This means the total net spec position in the pound is now short, but only 6.1K

      –  Japanese Yen (JPY/USD):  Last week the OI in the pound was about 12K larger than that in the yen. In the yen however there was not the massive spec selling.  Large specs remain a 3.2 ratio short , while the small spec is a 4.3-to-1 short.  The total yen short is now 133.9K.

      –  Swiss Franc (CHF/USD):  The SF continues to move with the euro.  Specs are short 30/8K down a small number from last week.  Small specs are a 3.9 ratio short.

      –  Canadian Dollar (CAD/USD):  Small specs flipped to the short side of the C$ last week and added to that position in the most recent period.  While large specs remain a token long, the enthusiasm of the smalls have taken the total net position to short 4.8K.  With the option OI 8.8% of the total, there may be more Sept contract liquidation to come.

      –  New Zealand Dollar (NZD/USD):  There was heavy liquidation in the kiwi taking the total OI down to a mere 16K.  Large specs shedd their longs as the market tumbled.  Small specs are not short, and the combined total spec position is a mere 39 contracts short.

      –  Australian Dollar (AUD/USD):  The spec selling in the A$ was decisive.  The small specs flipped to the short side and ended the period almost 12K short.  Large specs were heavy sellers in the A$, remain long, but reduced their holding by about 20K.  They remained long 20K, but we suspect sever market weakness since has taken them out of their long.  The combined A$ spec position remained long 7.9K.

Currency Commitments of Traders with Delta-adjusted Options and Futures Combined,
data through September 16, 2014
US Dollar Index (USD/EUR,JPY,GBP,CAD,CHF,SEK)
(1) Large Traders (2) Small Traders (3) Commercial
Open Interest Long Short Long Short Long Short
Contracts: 91,523 73,996 20,660 9,189 1,484 6,846 67,887
Change: 1,461 1,752 -19,063 -377 -610 1,469 22,517
 % Open Interest:
80.8 22.6 10.0 1.6 7.5 74.2
Euro (EUR/USD)
(1) Large Traders (2) Small Traders (3) Commercial
Open Interest Long Short Long Short Long Short
Contracts: 497,010 77,348 218,606 38,856 92,633 321,048 126,013
Change: -87,773 17,668 -528 -6,799 -5,339 -59,616 -42,880
 % Open Interest:
15.6 44.0 7.8 18.6 64.6 25.4
British Pound Sterling (GBP/USD)
(1) Large Traders (2) Small Traders (3) Commercial
Open Interest Long Short Long Short Long Short
Contracts: 185,716 56,219 54,784 25,227 32,827 75,283 69,118
Change: -121,280 -26,723 5,955 -1,773 -1,817 -86,249 -118,883
 % Open Interest:
30.3 29.5 13.6 17.7 40.5 37.2
Japanese Yen (JPY/USD)
(1) Large Traders (2) Small Traders (3) Commercial
Open Interest Long Short Long Short Long Short
Contracts: 249,918 37,408 122,729 14,578 63,156 177,186 43,287
Change: -44,636 19,727 965 -3,370 -3,202 -45,080 -26,487
 % Open Interest:
15.0 49.1 5.8 25.3 70.9 17.3
Swiss Franc (CHF/USD)
(1) Large Traders (2) Small Traders (3) Commercial
Open Interest Long Short Long Short Long Short
Contracts: 60,107 12,972 23,880 7,158 27,104 38,299 7,445
Change: -21,838 3,193 476 -1,318 -598 -5,351 -3,354
 % Open Interest:
21.6 39.7 11.9 45.1 63.7 12.4
Canadian Dollar (CAD/USD)
(1) Large Traders (2) Small Traders (3) Commercial
Open Interest Long Short Long Short Long Short
Contracts: 132,659 35,944 29,720 25,746 36,776 59,322 54,515
Change: 9,736 3,113 8,501 -3,002 3,436 8,435 -3,391
 % Open Interest:
27.1 22.4 19.4 27.7 44.7 41.1
New Zealand Dollar (NZD/USD)
(1) Large Traders (2) Small Traders (3) Commercial
Open Interest Long Short Long Short Long Short
Contracts: 16,061 9,814 8,694 2,387 3,546 3,703 3,664
Change: -8,870 -4,555 3,847 -1,058 281 -1,643 -11,384
 % Open Interest:
61.1 54.1 14.9 22.1 23.1 22.8
Australian Dollar (AUD/USD)
(1) Large Traders (2) Small Traders (3) Commercial
Open Interest Long Short Long Short Long Short
Contracts: 127,397 56,176 36,518 20,786 32,527 39,482 47,398
Change: -22,130 -17,915 1,715 -4,994 7,016 -1,076 -32,717
 % Open Interest:
44.1 28.7 16.3 25.5 31.0 37.2

To view the COT report data released by the U.S. Commodities Futures Trading Commission (CFTC), please see the attached files:
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Thursday, 11 September 2014

Trading Volume Soars in Currency Futures - USD Demand Continues

Ralph Shell, Excel Analyst

As traders know, when the size of your account grows, an increase in trading volume soon follows.  Unless, of course, you are one of those rare disciplined traders who takes money out of the account and time away from the market after a serious of successful trades. 

Speculators were correct with their large bearish bets in the euro and the yen.  Now, with the increased equity, the trading volume has forged ahead.  Yesterday at the CME forex futures markets, there were 1,659, 838 contracts traded,  At day's end, the total open interest in all futures contracts was 1,687, 451 contracts.  This shows the turn over was almost the entire OI of CME currencies in a day. 

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Sunday, 7 September 2014

Japanese Yen Falls to Lowest Since 2008, Euro Lowest Since 2013

Ralph Shell, Excel Analyst

It was a banner week for the USD bulls as they pushed the euro (EURUSD, FXE, UUD, UDN) to the lowest level versus the USD since July 2013, and the lowest in the yen versus the USD since September 2008.  It was euro and yen weakness that widened the spreads.  Since the market was loaded with spec shorts, it has been a good week for those correctly positioned.

Going forward, this means we are headed for trading sessions with increasing volatility.  From personal experience, I know when traders have more equity in their accounts, they trade more.

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Friday, 5 September 2014

Winners - Excel Markets Demo Trading Account Contest

Congratulations! The Winners of the Excel Markets Demo Trading Contest (August 2014, USD2500 Cash Prizes) have been officially declared and you can see the final rankings, including the top 10, on the rankings page.

The contest was a great success and attracted 910 participants - thank you for taking part and congratulations to our Winners.

Click to Enlarge Winners List
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Wednesday, 3 September 2014

Specs Sell the Yen and the Euro Versus the USD

It sounds like a broken record as the specs continue to extend their short position in the yen and the euro.  The total euro spec short positions, which includes both the large and the small shorts and the delta adjusted positions in options, is up to 198K in the euro, and 154K in the yen.  The total positions of all the currencies we cover is 419.3K of longs and 89.3K of shorts.  This is the largest net long in the USD since the report of August 6th 2013.  The recent record total USD long was in May of 2013 when it topped 540K.

The biggest short position in the USD is against a long in the A$.  Large specs continue to but the Aussie and their long is now up to 43.2K.  Aside from the interest rate advantage in the A$, market action in the A$ versus the USD has been neutral.  The total commodity currency long is now up to 60.5K, despite liquidation by the specs of their long Canadian Dollars.

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