What did the report show last week?

Friday's bring us the weekly commitment of traders report. For those who do not know the COT report from the CFTC shows the net speculative positions of the futures contracts. These are supposedly not hedges but outright speculative positions.

The values are actually the close of business on Tuesday. So they could have changed already but they tend to give an idea of the bias of those trading the market.

How does that help us?

There is a school of thought that traders tend to overstay their welcome in a currency. They may go long EUR for instance and the price goes up. The long is built up and built up, and then something happens that disrupts the market. The price starts to go down. If there is a big long position in the EUR, the selling can be intensified as speculative longs are forced to sell out their position.

Below are the speculative positions of the major currencies. The EUR and JPY have the biggest exposure. Traders are long the EUR, but short the JPY. So net/net you can say they are long EURJPY. The EURJPY fell sharply yesterday. Perhaps the longs were liquidating some of their position.

  • EUR long 93K.
  • GBP long 6K.
  • JPY short 114K
  • CHF short 29K.
  • CAD long 42K
  • AUD long 40k.
  • NZD short 13K

We will see, how the numbers pan out this week in a few minutes