Euro Sales Versus the USD Continue Heavy

There has been another week of selling in the euro. The total spec short position of futures and delta adjusted options at the cut off date for this report was 157,216 contracts. At the closing price of about 1.3420 at the end of the week, this equates to slightly less than 2.8 trillion USD. It is rare when so many traders are lined up on one side of the market, the market continues to go the way of the trade. Perhaps there are new shorts being made to keep pressure on the market, but there is usually a relief rally in these circumstances.

Long USD positions versus short positions in the euro, yen, Swiss franc and the long position in the DI amounts to a total long of 306, 526 contracts, When the USD short positions in the other currencies, which amounts to 136,051 contracts is deducted from the longs we end up with a USD long position of 170,475 contracts. This was a big increase from last week. There were no position flips for the week, however the Japanese yen specs stopped bailing from their yen shorts and reversed direction. The total yen short grew to 100.9K from about 75K last week. Despite the increased selling the USDJPY failed to break out of the trading range.

– US Dollar Index: The OI in the DI increased by 21%, but there was no significant change in the net USD long. The specs are long, 26K contracts, but this is only up from 24.6 last week. This means new bears and new USD bulls. Small specs are a 4.5 ratio long.

– Euro (EUR/USD): Trade in the euro continues to grow. The total OI is up to 421K and the total spec euro short has grown to 157.2K. Last week the short was only 132K. Small specs are a 2 ratio short, and large specs are now a 3 to 1 short. The total option/spreading category is up to 9.4% of the total market. An analysis which only gives net futures positions is only giving part of the story. In the euro, for example, there were 265K of options contract open at the close of trading on July 31st.

– British Pound Sterling (GBP/USD): Specs have been long the pound for months, but they have been gradually selling out their longs. The total long position remains, but it is down to 44.9K from 48.2 last week. This market is no longer an out of balance long, and might, perhaps, be due for a bounce.

– Japanese Yen (JPY/USD): Large specs once again jumped on the short side of the yen, increasing their short from 75K last week to almost 101K this week. The large specs increased their ratio short to 9.8 to one. The heavy selling in the yen versus the USD did weaken the yen to 103 to the USD. Despite the heavy selling, the total OI is still only 201K.

– Swiss Franc (CHF/USD): The OI grew to 47K as specs added to there short SF positions. The total SF short is now 22.3K up from 15.1 last period. Both size specs are better than a 1.9 ratio short.

– Canadian Dollar (CAD/USD): Large specs added to their net long in the C$ by reducing their shorts moe than they reduced their longs. The total spec net long increased to 29.9K, from 28K last week. Since the cut off for this report the market has gone against the loonie longs.

– New Zealand Dollar (NZD/USD): There was some nominal liquidation in the Kiwi but the big longs did not get out. Large specs are a 3 to 1 long. The total net long is 16.5K compared to 15.9 last week. Market action has been on the side of the bears since the cut off for this report.

– Australian Dollar (AUD/USD): Specs remain sizable longs in the Aussie despite a market that has merely meandered sideways. The total long is down to 44.7 from 46.3 last week. Commodity currencies remain popular with the big specs.

Currency Commitments of Traders with Delta-adjusted Options and Futures Combined, data through July 29, 2014.