CFTC Commitments of Traders (COT) Report, 11 December 2012 - Technical Analysis. The net spec short position in the USD grew this past week from 68K contracts to 109K contracts. While the aggregate net position is USD short, the specs do have a very big position short the yen and long the USD. The position in the yen is short over 104K contracts.

Specs remain short the euro versus a long USD but this position has been reduced to only 36K. Four weeks ago the specs were short 114K.

Currencies from commodity-producing countries remain exceptionally popular. Speculators believe the increased money supply from various monetary stimulus plans will inflate commodity prices. Since commodities are produced in Australia, Canada and New Zealand, those currencies are in demand.

The total of long positions held by specs in these three commodities now tallies 133.3K contracts. Some of this is probably inflated as specs may be buying replacement contracts to replace the December contracts that are about to expire.

  • US Dollar Index: The open interest (OI) went up about 10% as the large specs added to both long and short positions. The total spec long was reduced by a little less than 700 contracts.
  • Euro (EUR/USD): The reduction in the euro OI was the result of option expiration with spreading down 12,545 contracts, more than the total OI decline of 8622 contracts. Speculators again reduced their short euro positions and are now down to 36K contracts from 51.6 in the prior week. There was probably more short covering toward the end of last week, after the cut-off date for this report. Small specs are close to flipping to the long side of the market.
  • British Pound Sterling (GBP/USD): Specs continue to trade the long side of the pound. The small spec is a 2-ratio long and the large spec is long, but a smaller ratio. The market, today climbing above the 1.62 handle, has worked in the specs favor.
  • Japanese Yen (JPY/USD): The OI in the yen continued to surge, up 37.3K contracts, taking the total to 288.8K contracts. The increase was caused by commercials adding to both long and short positions. The yen has been very weak anticipating the political change from this past weekend's election. The total spec short position remained about the same, a very large 140.1K.
  • Swiss Franc (CHF/USD): Specs continue to be long the SF with a total net long of over 10.4K. Small specs carry a bigger net position in the Swissie than the large specs. Perhaps that is because the Swiss National Bank continues to peg the SF to the price of the euro, and the large hedge funds do not wish to fade the SNB.
  • Canadian Dollar (CAD/USD): Both the large and the small specs made modest additions to their long positions. The large spec is now a 6.3 ratio long and the small spec is a 2.2 long. The total spec long position in the C$ is up to 86.1K contracts.
  • New Zealand Dollar (NZD/USD): The OI continues to spike up but some of this might be buying in anticipation of replacing longs once the December contract expires. Large specs are a 6-ratio long and the small specs are about a 3-to-1 long. Markets have rewarded the longs as commodity currencies remain in vogue.
  • Australian Dollar (AUD/USD): Specs continue to accumulate a long position in the A$. Large specs now have over a 104K contract long position. They are a 4-ratio long. Small specs are likewise long but only modestly. The total long A$ position is up to 188.5K contracts. With expiration of the December contract this week, it will be interesting to see how much will be liquidated.

The COT Report reflects a condensed version of currency traders collective market votes as derived from the U.S. Commodity Futures Trading Commissionís weekly data output. Any opinions, news, research, analyses, prices, or other information contained in this discussion post are provided as general market commentary, and do not constitute investment advice from and/or