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The Currency Futures Report

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All Eyes on Production (GDP)

Mon, Oct 26 2009, 07:54 GMT
by Alaron Team

Alaron

Commitment of traders data released Friday October 23rd showed an increase in positions betting against the US Dollar last week. Significant changes include a large decrease in short positions betting on the Sterling to decline in value and increases in net long positions in Australian and Canadian dollars.

JAPANESE YEN (Contracts of 12,500,000 yen)

10/20/09 week 10/13/09 week

Long 49,401 49,817

Short 18,216 16,478

Net 31,185 33,339

EURO (Contracts of 125,000 euros)

10/20/09 week 10/13/09 week

Long 77,829 79,762

Short 41,796 36,395

Net 36,033 43,367

POUND STERLING (Contracts of 62,500 pounds sterling)

10/20/09 week 10/13/09 week

Long 15,644 9,898

Short 58,962 75,244

Net -43,318 -65,346

SWISS FRANC (Contracts of 125,000 Swiss francs)

10/20/09 week 10/13/09 week

Long 30,017 27,537

Short 6,164 5,258

Net 23,853 22,279

CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars)

10/20/09 week 10/13/09 week

Long 52,689 50,739

Short 9,152 6,543

Net 43,537 44,196

AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars)

10/20/09 week 10/13/09 week

Long 62,429 59,930

Short 8,439 7,283

Net 53,990 52,647

(Source Reuters News)

All eyes will be on US 3rd quarter Gross Domestic Production report due to be released Thursday October 29th. The US economy is expected to show growth in the 3rd quarter as government stimulus programs including the 3 Billion dollar "Cash for Clunkers" program and tax credits for first-time homebuyers impact is announced. According to Bloomberg news, the median estimate is expected to show a 3.2% increase in economic growth over the third quarter, after declining for the last 4 quarters.

China's economy grew by 8.9% year over year in the 3rd quarter as stimulus spending and lending growth helped to improve Chinese demand for exports from commodity producing nations such as Australia, (Gold), and Canada, (Oil). Australia became the first of the G-20 nations to raise their interest rates recently in an effort to head off inflationary pressures as their economy recovers. Both the Australia and Canada have seen their dollars increase to the highest levels in 14 months recently, with the Canadian dollar nearing parity with the US dollar last week in a trend which is likely to continue for the near term.

A British Pounding

UK GDP dropped unexpectedly, (-0.4%), for the 3rd quarter according to the Office for National Statistics in London Friday, surprising the market and sending the Sterling down nearly 2%. According to Bloomberg News, of 23 economists surveyed the median forecast was for a 0.2% increase, with none forecasting a contraction. This means the Bank of England will likely have to continue qualitative easing, increasing the supply of its currency and therefore pressuring its value lower over the near term. Look for opportunities to be short the Sterling over the coming week.

Published on  Mon, Oct 26 2009, 07:56 GMT