Canadian Dollar Short Being Covered by Specs

Both size spec groups have been short a large number of Canadian Dollar contracts since November 2013. The maximum short was almost 87K contracts during the period ended January 24th 2014. Specs still retain their short C$, but the position has been reduced to 49.7K contracts from the previous weeks 55.4. After making a USD high versus the C$ at 1.1267 on March 20th, the C$ has since reversed. It is now trading a couple hundred pips stronger next to the USD.

The total net USD long position measured against all the currencies was 63.6K, a minor reduction from last week's tally of 69.3K. Offsetting the additional USD selling was buying of the USD versus the yen. Yen shorts are again back to over 100K.

Trade in the British pound remains quite active. The total OI in the pound is 220K and the specs are long almost 44K. The pound has been higher for the last six straight days , but so far has been unable to exceed the resistance above the 1.6750 area. What will it take to send the pound higher, or will specs tire of their position and bail out.

• US Dollar Index: Large traders are short the DI, but did reduce their position to about 11K, down about 1K. Small traders are long the DI by a 3.2 to 1 ratio. Since small traders compose such a small portion of the DI trade, this means over all specs are short the DI by 5.3K.

• Euro (EUR/USD): Early in the period the euro was under some pressure. Specs have been long the euro and did reduce their position from 33.5K to 21.3. Aside from the long liquidation, there was little feature in the euro trade.

• British Pound Sterling (GBP/USD): Specs remain long the pound and increased their total net long to 43.9K up modestly from 40.6K last period. Since the end of the period, the pound has rallied so the long position probably grew. The large spec is getting close to a 2 to 1 ratio.

• Japanese Yen (JPY/USD): After several weeks when the specs were reducing their yen short position, they altered that strategy in this period. The total yen net short position went up from 85.8K to 100.1K. The small spec is now a 3.0 ratio short and the large spec is a 5 short. The yen versus the USD has weakened since the cut off for the report, but still remains range bound.

• Swiss Franc (CHF/USD): The combined long of the specs in the SF is 88.2% of the total market. Their net position is only 20.7K down from 22.8 last week. The total OP is only 52K contracts but this does illustrate the SF is dominated by speculative trade.

• Canadian Dollar (CAD/USD): The belated liquidation of the OI in the March C$ contract resulted in a reduction of 52.5K in the OI. Specs remain a very big short in the C$, but that has been reduced to 49.7K. It is unusual to see the OI in spreading is for the C$, high at 6.2% of the total OI. After making a new yearly high during this period, the C$ has been selling off.

• New Zealand Dollar (NZD/USD): Large specs continue to buy the Kiwi. The OI has grown to about 33K in this very small market. The gross long of the Kiwi, by the large spec, is 80.1% of the market. Total spec long is 20.8K. News highs for the market has been made since the cut off for this period.

• Australian Dollar (AUD/USD): The OI grew a bit last period but still remains small at under 100K. Spreading remains a large percentage of the total OI in this market. Specs remain short the A$, but continued to reduce that position to 25.7K. Since the cut off for this report, the A$ has continued to rally taking it to a yearly high.

Currency Commitments of Traders with Delta-adjusted Options and Futures Combined, data through March 25, 2014.