The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators cut back on their US dollar long positions last week and Euro short positions improved for the first time in six weeks from their record low level.

Non-commercial futures traders, usually hedge funds and large speculators, decreased their total US dollar long positions to $14.22 billion on January 31st from a total long position of $20.09 billion on January 24th, according to the CFTC COT data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

Individual Currencies:

EuroFX: Currency speculators decreased their Euro short positions for the first time in six weeks as of January 31st after raising their short bets to a new record high the previous week. Euro net short positions totaled 157,546 short bets against the euro currency from the previous week’s total of 171,347 net short contracts.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: British pound sterling positions showed improvement for a second consecutive week and increased to their best level since December 20th. British pound positions saw a total of 26,214 short positions on January 31st following a total of 31,361 net short positions registered on January 24th, according to the CFTC data.

JPY: The Japanese yen net long speculative contracts reversed two consecutive weeks of declines, according to the latest data on January 31st. Yen long positions increased to a total of 56,669 net long contracts reported on January 31st following a total of 44,367 net long contracts that were reported on January 24th. Yen speculative positions are just below their highest level in over a year that was registered on January 10th when contracts surpassed the August 2nd level of 58,833 contracts.

CHF: Swiss franc speculators slightly trimmed their short bets against the Swiss currency for a second consecutive week as of January 31st. Speculator positions for the Swiss currency futures numbered a total of 11,222 net short contracts on January 31st following a total of 12,514 net short contracts as of January 24th. Swiss contracts have now been on the short side by more than 10,000 contracts for six consecutive weeks and positions have seen limited movements either way.

CAD: Canadian dollar positions slightly declined after improving the previous week for the first time in three weeks. Canadian dollar positions declined to a total of 19,409 net short contracts as of January 31st following a total of 18,909 short contracts reported on January 24th. CAD positions on January 17th had marked their lowest level in over a year and a total of 28,730 net short contracts.

AUD: The Australian dollar long positions continued higher for a sixth consecutive week as of January 31st. Australian dollar positions increased to a total net amount of 78,044 long contracts on January 31st after totaling 69,486 net long contracts reported as of January 24th. The AUD speculative positions are now at their highest level since July 26th when Australian dollar long positions totaled 81,438.

NZD: New Zealand dollar futures speculator positions rose higher and advanced for a sixth consecutive week through January 31st. NZD contracts increased to a total of 14,797 net long contracts as of January 31st following a total of 12,932 net long contracts on January 24th. NZD positions have now risen for six straight weeks from the December 20th low standing (which was the lowest position since March 29th when positions equaled 239 long contracts) and to the highest level since September 13th when net long contracts equaled 17,664.

MXN: Mexican peso speculative contracts improved for a fourth consecutive week and rose to the best position since August 23rd against the US dollar. Peso long positions numbered a total of 21,481 net long speculative positions as of January 31st following a total of 7,418 long contracts that were reported on January 24th. Peso contracts crossed over into a positive long position on January 24th for the first time since September 6th.

COT Currency Data Summary as of January 31, 2012
Large Speculators Net Positions vs. the US Dollar

EUR -157546
GBP -26214
JPY +56669
CHF -11222
CAD -19409
AUD +78044
NZD +14797
MXN +21481

Other COT Trading Resources:

Trading Forex Using the COT Report

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators continued to pile into bets against the European common currency for a fifth consecutive week.

Non-commercial futures traders, usually hedge funds and large speculators, added to their short positions for the euro while trimming short positions in the British pound sterling, Swiss franc and the Canadian dollar. The Australian dollar, New Zealand dollar and the Mexican peso saw higher long positions directly against the US dollar while the Japanese yen decreased for a second consecutive week.

Individual Currencies:

EuroFX: Currency speculators added more to their Euro short positions for a fifth week as of January 24th and raised their short bets to a new record high once again. Euro short positions totaled 171,347 net short contracts from the previous week’s total of 160,030 net short contracts as speculator sentiment for the common European currency for futures speculators remained dismal last week.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: British pound sterling positions showed improvement following four consecutive weeks of declines as of January 24th. British pound positions saw a total of 31,361 short positions on January 24th following a total of 41,634 net short positions registered on January 17th.

JPY: The Japanese yen net long speculative contracts declined lower for a second consecutive week, according to the latest data on January 24th. Yen long positions decreased to a total of 44,367 net long contracts reported on January 24th following a total of 58,862 net long contracts that were reported on January 17th. Yen speculative positions on January 10th had registered their highest level in over a year surpassing the August 2nd level when long positions leveled at 58,833 contracts.

CHF: Swiss franc speculators slightly trimmed their short bets against the Swiss currency as of January 24th although positions have barely changed in the past four weeks. Speculator positions for the Swiss currency futures numbered a total of 12,514 net short contracts on January 24th following a total of 12,822 net short contracts as of January 17th. Swiss contracts have now been on the short side by more than 10,000 contracts for five consecutive weeks.

CAD: Canadian dollar positions improved after declining for three consecutive weeks. Canadian dollar positions improved to a total of 18,909 net short contracts as of January 24th following a total of 28,730 short contracts reported on January 17th. CAD positions on January 17th marked their lowest level in over a year.

AUD: The Australian dollar long positions continued higher for a fifth consecutive week as of January 24th. Australian dollar positions increased to a total net amount of 69,486 long contracts on January 24th after totaling 54,306 net long contracts reported as of January 17th. The AUD speculative positions are at their highest level since August 2nd when Australian dollar long positions totaled 75,598.

NZD: New Zealand dollar futures speculator positions rose higher and increased for a fifth consecutive week through January 24th. NZD contracts advanced to a total of 12,932 net long contracts as of January 24th following a total of 9,455 net long contracts on January 17th. NZD positions have now risen for five straight weeks from the December 20th low standing (which was the lowest position since March 29th when positions equaled 239 long contracts) to the highest level since September 20th.

MXN: Mexican peso speculative contracts improved for a third consecutive week and crossed back over to a positive long position against the US dollar. Peso long positions numbered a total of 7,418 net long speculative positions as of January 24th following a total of 17,328 net short contracts that were reported on January 17th. Peso contracts are now in a positive long position for the first time since September 6th win contracts were positive by 13,246.

COT Currency Data Summary as of January 24, 2012
Large Speculators Net Positions vs. the US Dollar

EUR -171347
GBP -31361
JPY +44367
CHF -12514
CAD -18909
AUD +69486
NZD +12932
MXN +7418

Other COT Trading Resources:

Trading Forex Using the COT Report

Today, I am pleased to share our latest forex interview on the latest major forex events and currency trends with John Kicklighter, Senior Currency Strategist at DailyFx.com. John specializes in fundamental analysis and overall market themes and has trading experience in spot currency, financial futures, commodities, stocks, and options. In his analysis for DailyFx, John’s regularly reports on G10 fundamental forecasts, global risk sentiment and carry trade analysis while his commentary has been featured in many publications including Bloomberg, Reuters, CNBC, AFP, and The Australian.

This week happens to be a relatively busy week of US economic data releases that includes the GDP report, an interest rate decision, home sales data and the durable goods report. What do you feel will be the one or two most important events and themes to pay attention to for the week and for the rest of January?

All of the economic data that is scheduled for release through the immediate future will play a role in shaping expectations for the relative health of the United States – an important consideration when there is a very real threat of recession for many of its most prominent counterparts. However, most individual indicators (like the housing data, durable goods orders and for that matter, probably even next week’s NFPs) will not significantly alter the larger consensus trend. The exception is the first reading of 4Q GDP. This figure can confirm or deny the market consensus, and catching market participants off guard on a big theme like this is a rare enough event that its impact is leveraged. Tapping the more elemental consideration of risk/reward, the FOMC decision could also be a market mover as it will offer a better framework for further stimulus and the eventual withdrawal of easy money. This particular meeting is a unique event as they will start producing interest rate forecasts along with their updates on growth and policy bearings. These are the known and definitive considerations. Real impact potential though comes from the unknown – speculation of QE3 and progress on the most recent ‘hope revival’ for the euro.

The EUR/USD has broken above the 1.30 level this week in trading. Do you feel the EUR/USD can sustain this momentum at these levels and perhaps ascend higher?

From a purely fundamental perspective, I think the euro has no business posting a meaningful advance. That said, this isn’t an academically-based fundamental world. Sentiment determines when a currency needs to be repriced. That being said, the market will itself to be caught up in the hope that additional stimulus is coming through for the Euro-area and that the Greek situation will be reconciled because the short-side is temporarily oversaturated.  Though not a full representation of the spot market (due to difference in market depth and participation) the COT report of net speculative interest in Euro futures set a record level of shorts through the week ending Tuesday. Often, when we reach these extremes, it is a sign that one side of the market has been exhausted and a correction would be easier to facilitate. Given the depths the euro has plunged on an exchange rate and futures positioning  basis, a bigger rebound wouldn’t be too hard to facilitate.

Seeing the CFTC futures speculators data showed that specs were still very euro-bearish last week, do you feel we could perhaps see a change in sentiment (a bottom reached and/or a short squeeze?)?

The CFTC’s Commitment of Traders report measures open positions to the Tuesday of that week. Therefore, the record net short exposure reading that we were given was not representative of the big Euro rally on Wednesday and Thursday. There is a good chance that exposure will see a correction with the next reading to account for the recent change in EURUSD’s bearing (even if it is temporary). That said, a quick reversal (in either price or extreme positioning) doesn’t necessarily guarantee a larger trend reversal. It’s important to remember in these times that there are corrections in larger trends.

What do feel is propelling the AUD/USD and the NZD/USD higher at this point? They are now respectively trading at their highest levels since October. Despite the AUD and NZD’s correlation to risk, these two pairs have largely avoided the euro’s slide of the last few months.

The euro itself is not a good representation of risk. We have seen the correlation between EURUSD and the S&P 500 (my favored gauge for risk appetite) deteriorate significantly over the past week. Anything can be a catalyst for broader risk aversion, but it doesn’t guarantee that everything and anything will do it. Through the euro’s recent slide, we have seen demand for equities slowly but steadily chop higher to five month highs. It is this acceptance of risk and appetite for higher yield that is encouraging capital to flow over to the higher yielding currencies.

The USD/JPY has been trading in a relatively tight range since the beginning of the new year roughly between 76.50 and 77.50. Do you see any catalyst upcoming that might be able to allow a breakout of this range? Likely more of the same sideways action?

The US dollar and Japanese yen are frustratingly, evenly matched as safe havens – that is in tolerable market conditions (should the very stability of the world’s financial markets come into question, capital will move over to the US dollar and its Treasuries, no questions asked). With volatility behind risk trends smoothing out, the need to favor a particular low-yield and deep-market currency diminishes significantly. Clearly, a crisis of global proportions could encourage a shift  to the safety of the US market. In the absence of that overwhelming catalyst, we still have the possibility of BoJ intervention (though it seems they are looking at both EURJPY and USDJPY for inspiration).

As we have entered a new year, do you have any predictions for winners or losers over the first half of the year in terms of specific currencies and trends? Any other markets you feel may have a bearing on the major currencies?

Given the heights equities (and exposure to risk in general) have marched to, a bigger correction in long-risk exposure is highly probable. That means, high yield currencies, equities, speculative commodities, and high-yield paper are at risk of a deep correction. And, if all come under significant enough pressure at the same time, we could possibly see the funding markets freeze up; which is a crisis unto itself. In a regular risk aversion scenario, we can see the US dollar and Japanese yen advance for currencies while government paper and money markets for the US, UK, Germany and Japan swell. After such a down leg, we could see one of two scenarios. A short-term downdraft would see the Fed or some other equally dedicated policy authority step in with an artificial booster in the form of stimulus. Otherwise, a longer deleveraging would eventually flag and send too much capital to the sidelines – and the void would eventually need to be filled so market participants can make money and possibly take advantage of considerable discounts (after a meaningful reduction in cost).

Thank you John for taking the time to answer my questions in this week’s forex interview. To read John’s latest currency analysis and trading strategies you can visit DailyFx.com. Find more information to follow John below.

John Kicklighter
PHONE: (415) 343-4923
EMAIL: jkicklighter@fxcm.com
LOCATION: San Francisco
TWITTER: @JohnKicklighter

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators continued to increase their Euro and British pound sterling short bets for a fourth consecutive week while long US dollar bets overall edged higher.

Non-commercial futures traders, usually hedge funds and large speculators, added to their total US dollar long positions to $18.77 billion on January 17th from a total long position of $17.43 billion on January 10th, according to the CFTC COT data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

Individual Currencies:

EuroFX: Currency speculators continued to add to their Euro short positions as of January 17th and raised their short bets to a new record high. Euro short positions totaled 160,030 net short contracts from the previous week’s total of 155,195 net short contracts as speculator sentiment for the common European currency has declined for four consecutive weeks.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: Bearish bets of the British pound sterling rose for a fourth consecutive week as of January 17th and to the lowest level since December 6th. British pound positions saw a total of 41,634 short positions on January 17th following a total of 35,853 net short positions registered on January 10th. This is the lowest level since speculators were short by 43,560 contracts on December 6th.

JPY: The Japanese yen net long speculative contracts edged slightly lower but remained virtually unchanged from the previous week, according to the latest data on January 17th. Yen long positions dipped to a total of 58,862 net long contracts reported on January 17th following a total of 59,657 net long contracts that were reported on January 10th. Yen speculative positions on January 10th registered their highest level in over a year surpassing the August 2nd level when long positions leveled at 58,833 contracts.

CHF: Swiss franc speculators slightly increased their short bets against the Swiss currency as of January 17th although positions have barely changed in the past three weeks. Speculator positions for the Swiss currency futures numbered a total of 12,822 net short contracts on January 17th following a total of 12,097 net short contracts as of January 10th. Swiss contracts have now been on the short side by more than 10,000 contracts for four consecutive weeks.

CAD: Canadian dollar positions fell slightly for a third consecutive week to a total of 28,730 net short contracts as of January 17th following a total of 28,649 short contracts reported on January 10th. CAD positions are at their lowest level in at least a year.

AUD: The Australian dollar long positions advanced higher for a fourth consecutive week as of January 17th. Australian dollar positions increased to a total net amount of 54,306 long contracts on January 17th after totaling 53,526 net long contracts reported as of January 10th. The AUD speculative positions are at their highest level since August 2nd when Australian dollar long positions totaled 75,598.

NZD: New Zealand dollar futures speculator positions jumped higher and rose for a fourth consecutive week through January 17th. NZD contracts increased to a total of 9,455 net long contracts as of January 17th following a total of 5,029 net long contracts registered the previous week. NZD positions have increased for four straight weeks from the December 20th low standing (which was the lowest position since March 29th when positions equaled 239 long contracts) to the highest level since November 15th.

MXN: Mexican peso speculative contracts improved slightly against the US dollar for a second consecutive week. Peso short positions numbered a total of 17,328 net short speculative positions as of January 17th following a total of 22,332 short contracts that were reported on January 10th. Peso contracts are now after best level since November 15th when short contracts equaled 15,021.

COT Currency Data Summary as of January 17, 2012
Large Speculators Net Positions vs. the US Dollar

EUR -160030
GBP -41634
JPY +58862
CHF -12822
CAD -28730
AUD +54306
NZD +9455
MXN -17328

Other COT Trading Resources:

Trading Forex Using the COT Report

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators raised their overall long bets for the US dollar last week against the other major currencies while Euro short positions continued to increase and rose to a new record level for a third consecutive week.

Non-commercial futures traders, usually hedge funds and large speculators, added to their total US dollar long positions to $17.43 billion on January 10th from a total long position of $15.71 billion on January 3rd, according to the CFTC COT data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

Individual Currencies:

EuroFX: Currency speculators once again added to their Euro short positions as of January 10th and raised their short bets to a new record high. Euro short positions numbered a total of 155,195 net short contracts from the previous week’s total of 138,909 net short contracts as sentiment for the common European currency erodes.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: Bearish bets of the British pound sterling rose for a third consecutive week as of January 10th to the lowest level since November 22nd. British pound positions saw a total of 35,853 short positions on January 10th following a total of 31,899 net short positions registered on January 3rd.

JPY: The Japanese yen net long speculative contracts increased higher for a second consecutive week, according to the latest data on January 10th. Yen long positions rose to a total of 59,657 net long contracts reported on January 10th following a total of 56,481 net long contracts that were reported on January 3rd. Yen speculative positions are now at their highest level in over a year surpassing the August 2nd level when long positions registered 58,833 contracts.

CHF: Swiss franc speculators slightly decreased their short bets against the Swiss currency as of January 10th. Speculator positions for the Swiss currency futures numbered a total of 12,097 net short contracts on January 10th following a total of 12,355 net short contracts as of January 3rd.

CAD: Canadian dollar positions fell for a second consecutive week to a total of 20,649 net short contracts as of January 10th following a total of 23,371 short contracts reported on January 3rd. CAD positions are now at their lowest level in at least a year after surpassing the previous low registered on November 29th at 26,869 short contracts.

AUD: The Australian dollar long positions advanced higher for a third consecutive week as of January 10th. Australian dollar positions increased to a total net amount of 53,526 long contracts on January 10th after totaling 46,537 net long contracts reported as of January 3rd. The AUD speculative positions are now at their highest level since August 2nd when Australian dollar long positions totaled 75,598.

NZD: New Zealand dollar futures speculator positions increased higher for a third consecutive week through January 10th. NZD contracts increased to a total of 5,029 net long contracts as of January 10th following a total of 2,436  net long contracts registered the previous week. NZD positions have increased for three straight weeks from the December 20th standing (612 long contracts) which was the lowest position since March 29th when positions equaled 239 long contracts.

MXN: Mexican peso speculative contracts improved slightly against the US dollar as traders continue to short the Mexican currency and the positions have made little movement since turning over to the short side. Peso short positions numbered a total of 22,332 net short speculative positions as of January 10th following a total of 25,829 short contracts that were reported on January 3rd.

COT Currency Data Summary as of January 10, 2012
Large Speculators Net Positions vs. the US Dollar

EUR -155195
GBP -35853
JPY +59657
CHF -12097
CAD -28649
AUD +53526
NZD +5029
MXN -22332

Other COT Trading Resources:

Trading Forex Using the COT Report

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators decreased their overall long bets for the US dollar last week against the other major currencies despite Euro short positions rising to a new record level.

Non-commercial futures traders, usually hedge funds and large speculators, decreased their total US dollar long positions to $15.71 billion on January 3rd from a total long position of $20.35 billion on December 27th, according to the CFTC COT data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

Individual Currencies:

EuroFX: Currency speculators continued to add to their Euro short positions as of January 3rd and raised their short bets to a new record high surpassing the previous one registered two weeks ago. Euro short positions numbered to a total of 138,909 net contracts from the previous week’s total of 127,879 net short contracts.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: Bearish bets of the British pound sterling increased for a second consecutive week as of January 3rd. British pound positions saw a total of 31,899 short positions on January 3rd following a total of 29,172 net short positions registered on December 27th.

JPY: The Japanese yen net long speculative contracts surged higher, according to data on January 3rd. Yen long positions jumped to a total of 56,481 net long contracts reported on January 3rd following a total of 20,585  net long contracts that were reported on December 27th. The sharp rise in Yen speculative positions put them at their highest level since August 2nd when long positions registered 58,833 contracts.

CHF: Bets in favor of the Swiss franc decreased for a second consecutive week as of January 3rd. Speculator positions for the Swiss currency futures fell to a total of 12,355 net short contracts on January 3rd following a total of 10,798 net short contracts as of December 27th.

CAD: Canadian dollar positions declined slightly to a total of 23,371 net short contracts as of January 3rd following a total of 20,812 short contracts reported on December 27th. CAD speculators have had a bearish position against the US dollar since September 6th and positions have consistently hovered around the 20,000 short contracts level since late September.

AUD: The Australian dollar long positions rose for a second consecutive week as of January 3rd. Australian dollar positions increased to a total net amount of 46,537 long contracts on January 3rd following a total of 32,637 net long contracts reported as of December 27th. The AUD speculative positions are now at their highest level since September 6th when Australian dollar long positions totaled 48,041.

NZD: New Zealand dollar futures speculator positions edged slightly higher for a second consecutive week through January 3rd. NZD contracts increased to a total of 2,436 net long contracts as of January 3rd following a total of 1,405 net long contracts registered the previous week. NZD contract’s show a slightly bullish position against the USD and are improved from the December 20th standing (612 long contracts) which was the lowest position since March 29th when positions equaled 239 long contracts.

MXN: Mexican peso speculative contracts barely moved against the US dollar as traders continue to short the Mexican currency. Peso short positions numbered a total of 25,829 net short speculative positions as of January 3rd following a total of 25,685 short contracts that were reported on December 27th.

COT Currency Data Summary as of January 3, 2012
Large Speculators Net Positions vs. the US Dollar

EUR -138909
GBP -31899
JPY +56481
CHF -12355
CAD -23371
AUD +46537
NZD +2436
MXN -25829

Other COT Trading Resources:

Trading Forex Using the COT Report

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators added to their overall long bets for the US dollar last week against the other major currencies while Euro short positions rose and ascended to a new record level as sentiment for the European common currency continues to deteriorate.

Non-commercial futures traders, usually hedge funds and large speculators, increased their total US dollar long positions to $20.35 billion on December 27th from a total long position of $17.63 billion on December 20th, according to the CFTC COT data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

EuroFX: Currency speculators added to their Euro short positions as of December 27th and pushed their short bets to a new record high surpassing the previous one registered on December 13th. Euro short positions decreased to a total of 127,879 net contracts from the previous week’s total of 113,697 net short contracts.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: Bearish bets of the British pound sterling increased as of December 27th after declines for three consecutive weeks through December 20th. British pound positions saw a total of 29,172 short positions on December 27th following a total of 25,939 net short positions registered on December 20th.

JPY: The Japanese yen net long speculative contracts edged lower in fell for a fifth consecutive week as of December 27th. Yen long positions declined to a total of 20,585 net long contracts reported on December 27th following a total of 24,476 net long contracts that were reported on December 20th. Yen speculative positions are at their lowest level since July 5th when long positions registered 14,327 contracts.

CHF: Bets in favor of the Swiss franc decreased as of December 27th after seeing improvement for two consecutive weeks. Speculator positions for the Swiss currency futures fell to a total of 10,798 net short contracts on December 27th following a total of 3,136 net short contracts as of December 20th.

CAD: Canadian dollar positions improved to a total of 20,812 net short contracts as of December 27th following a total of 26,868 short contracts reported on December 20th. CAD speculators have continued to have a bearish position against the US dollar since September 6th when contracts were last bullish with a total of 2,081 long contracts.

AUD: The Australian dollar long positions rose as of December 27th after declining the previous week. Australian dollar positions increased to a total net amount of 32,637 long contracts on December 27th following a total of 25,742 net long contracts reported as of December 20th. The AUD speculative positions on December 13th had reached their highest level since September 13th when Australian dollar long positions totaled 36,934.

NZD: New Zealand dollar futures speculator positions edged slightly higher after last week’s fall to just about a neutral position against the US dollar. NZD contracts increased to a total of 1,405 net long contracts as of December 27th following a total of 612 net long contracts registered the previous week. NZD contract’s show a slightly bullish position against the USD and are up from the previous week’s standing which was the lowest position since March 29th when positions equaled 239 long contracts.

MXN: Mexican peso contracts declined against the US dollar as more speculative traders chose to short the Mexican currency. Peso short positions rose to a total of 25,685 net short speculative positions as of December 27th following a total of 18,802 short contracts that were reported on December 20th.

COT Currency Data Summary as of December 27, 2011
Large Speculators Net Positions vs. the US Dollar

EUR -127879
GBP -29172
JPY +22585
CHF -10798
CAD -21812
AUD +32637
NZD +1405
MXN -25685

Other COT Trading Resources:

Trading Forex Using the COT Report

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators slightly raised their overall long bets for the US dollar last week against the other major currencies as of December 20th. Euro short positions against the US dollar improved slightly after falling to the highest level of the year and to a new record the previous week.

Non-commercial futures traders, usually hedge funds and large speculators, increased their total US dollar long positions to $17.63 billion on December 13th from a total long position of $16.32 billion on December 13th, according to the CFTC COT data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

EuroFX: Currency speculators slightly decreased their Euro short positions as of December 20th after pushing short bets the previous week to a new record high. Euro short positions decreased to a total of 113,697 net contracts from the previous week’s total of 116,457 net short contracts.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: Currency speculators decreased their bearish bets of the British pound sterling for a third consecutive week as of December 20th. British pound positions saw a total of 25,939 short positions on December 20th following a total of 39,509 net short positions registered on December 13th.

JPY: The Japanese yen net long speculative contracts fell for a fourth consecutive week as of December 20th. Yen long positions declined to a total of 24,476 net long contracts reported on December 20th following a total of 35,600 net long contracts that were reported on December 13th. Yen speculative positions are now at their lowest level since July 5th when long positions registered 14,327 contracts.

CHF: Swiss franc positions increased for a second consecutive week as of December 20th. Speculator positions for the Swiss currency futures edged higher to a total of 3,136 net short contracts on December 20th following a total of 10,481 net short contracts as of December 13th.

CAD: Canadian dollar positions decreased after rising higher for two consecutive weeks to the almost equal the lowest level all year. CAD net contracts fell to a total of 26,868 net short contracts as of December 20th following a total of 13,385 short contracts reported on December 13th. CAD positions are just about equal to their lowest level of the year that was registered on November 29 with 26,869 short contracts.

AUD: The Australian dollar long positions declined after rising for two consecutive weeks as of December 20th. Australian dollar positions fell to a total net amount of 25,742 long contracts on December 20th following a total of 34,429 net long contracts reported as of December 13th. The AUD speculative positions on December 13th had reached their highest level since September 13th when Australian dollar long positions totaled 36,934.

NZD: New Zealand dollar futures speculator positions declined and contracts stand at just about a neutral position. NZD contracts decreased to a total of 612 net long contracts as of December 20th following a total of 5,383 net long contracts registered the previous week. NZD contract’s stand at their lowest position since March 29th one positions equaled 239 long contracts.

MXN: Mexican peso contracts improved against the US dollar as less speculative traders chose to short the Mexican currency. Peso short positions decreased to a total of 18,802 net short speculative positions as of December 20th following a total of 22,894 short contracts that were reported on December 13th.

COT Currency Data Summary as of December 20, 2011
Large Speculators Net Positions vs. the US Dollar

EUR -113697
GBP -25939
JPY +24476
CHF -3136
CAD -26868
AUD +25742
NZD +612
MXN -18802

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators boosted their long bets for the US dollar last week against the Euro while other major currencies saw slight improvements, according to the latest data which shows trader positions as of December 13th.  Euro short positions against the US dollar rose to the highest level of the year and to a new record surpassing the May 11th 2010 level of 113,890 Euro short positions recorded.

Non-commercial futures traders, usually hedge funds and large speculators, increased their total US dollar long positions to $16.32 billion on December 13th from a total long position of $14.59 billion on December 6th, according to the CFTC COT data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

EuroFX: Currency speculators increased their Euro short positions to a new record high as of December 13th as doubts continue to mount over the Eurozone’s solutions to the ongoing sovereign debt crisis. Euro short positions increased to a total of 116,457 net contracts from the previous week’s total of 95,814 net short contracts. The last time the euro short positions were this high was May 2010 when contracts numbered 113,890.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: Currency speculators decreased their bearish bets of the British pound sterling as of December 13th for second consecutive week. British pound positions saw a total of 39,509 short positions on December 13th following a total of 43,560 net short positions registered on December 6th.

JPY: The Japanese yen net long speculative contracts decreased for a third consecutive week as of December 13th. Yen long positions declined to a total of 35,600 net long contracts reported on December 13th following a total of 38,271 net long contracts that were reported on December 6th.

CHF: Swiss franc positions reversed four consecutive weeks of declines to show improvement on December 13th. Speculator positions for the Swiss currency futures edged higher to a total of 10,481 net short contracts on December 13th following a total of 11,158 net short contracts as of December 6th.

CAD: Canadian dollar positions rose higher for a second consecutive week to the best level since September 20th. CAD net contracts improved to a total of 13,385 net short contracts as of December 13th following a total of 20,171 short contracts reported on December 6th. CAD positions are now at their highest level since being on the short side by 5,458 contracts in late September.

AUD: The Australian dollar long positions rose higher for second consecutive week after three consecutive weekly declines. Australian dollar positions rose to a total net amount of 34,429 long contracts on December 13th following a total of 29,824 net long contracts reported as of December 6th. The AUD speculative positions last week reached their highest level since September 13th when Australian dollar long positions totaled 36,934.

NZD: New Zealand dollar futures speculator positions improved for a second consecutive week as of December 13th after edging up just slightly higher the previous week. NZD contracts increased to a total of 5,383 net long contracts as of December 13th following a total of 3,857 net long contracts registered the previous week. NZD contract’s most recent bottom on November 29th was the lowest New Zealand dollar position level since April 5th when positions equaled 2,695 long contracts.

MXN: Mexican peso contracts fell last week directly against the US dollar as more speculative traders chose to short the Mexican currency. Peso short positions rose to a total of 22,894 net short speculative positions as of December 13th following a total of 20,862 short contracts that were reported on December 6th.

COT Currency Data Summary as of December 13, 2011
Large Speculators Net Positions vs. the US Dollar

EUR -116457
GBP -39509
JPY +35600
CHF -10481
CAD -13385
AUD +34429
NZD +5383
MXN -22894

Today, I am pleased to share a forex interview and commentary on this week’s major events and forex trends with currency analyst David Song from DailyFx.com. As an active trader, David relies on technical analysis for shorter-term forecasts while focusing on economic developments and central bank rhetoric to forecast long term currency price action.

David has been quoted by many major news sites including Reuters, Dow Jones Marketwatch, and CNN Money and his areas of expertise include central bank policy, economic indicators, and market events.

This week happens to be a very busy week of economic data releases that includes inflation reports, interest rate decisions and retail sales data. What do you feel will be the one or two most important events and themes to pay attention to for the week?

The biggest event risk for this week will be the FOMC interest rate decision followed by the Swiss National Bank on Thursday. The Federal Reserve is widely expected to maintain its current policy in December, but we may see the central bank talk down speculation for another large-scale asset purchase program as Fed officials expect economic activity to gradually gather pace in 2012.

As the fundamental outlook for the world’s largest economy improves, we should see the committee continue to carry out ‘Operation Twist,’ but Chairman Ben Bernanke may keep the door open to further expand the balance sheet in order to combat the protracted recovery in labor market.

We will also be keeping a close eye on the Swiss National Bank’s policy statement as we expect the central bank to keep the benchmark interest rate on hold, and the SNB may toughen its pledge to stem the marked appreciation in the Swiss franc as it drags on the real economy.

In light of the recent developments coming out of the euro-area, with the region facing increased threats of a credit rating downgrade, the EUR/USD broke below 1.3200 as market participants turned increasingly pessimistic towards the economy.

As European policy makers struggle to restore investor confidence, we expect the single currency to face additional headwinds over the near-term, and the sovereign debt crisis is likely to drag on the exchange rate for some time as the heightening risk for contagion bears down on trader sentiment.

The USD/JPY has maintained a relatively tight trading range since Japan’s Ministry of Finance intervened in the forex market to weaken the yen back on October 30th. Do you feel the outlook for this currency pair will continue to be ultimately bearish (following the long term trend) or do you think there is case for a more bullish expectation taking place?

I would not advocate fighting the long-term trend in the USD/JPY despite the threats of a currency intervention, and the Japanese Yen may continue to appreciate against its U.S. counterparts as currency traders remain heavily long against the pair. The DailyFX Speculative Sentiment Index (which tracks retail positions with FXCM account holders) currently stands at 4.22, reflecting that 4.22 traders are long for every trader that short.

The USD/JPY SSI ratio has held in positive territory since the pair has traded back around 90.00, and it seems as though we will see more declines in the exchange rate as traders remain heavily short the Yen.

The U.S. dollar should continue to appreciate over the medium to long-term as the fundamental outlook for the world’s largest economy improves.

As Fed officials see the recovery gradually gathering pace in 2012, there’s limited scope for the central bank to conduct another large-scale asset purchase program, and we should see market participants turn increasingly bullish against the USD once the FOMC brings its easing cycle to an end.

Although some Fed policy makers have voiced their opposition against more quantitative easing, the committee needs to show a greater willingness to start normalizing monetary policy to see the recent U.S. dollar rally be maintained over the medium to long-term.

Monday, December 12

Australian trade balance
Australian home loans
Japanese consumer confidence
Japanese tertiary industry index
United States monthly budget
New Zealand Westpac consumer confidence
New Zealand house sales

Tuesday, December 13

Great Britain nationwide consumer confidence
Great Britain RICS house prices
Australia housing starts
Australia nab business confidence
Switzerland SECO economic forecast
Great Britain consumer price index
Great Britain retail price index
Germany ZEW survey
Euro zone ZEW survey
United States retail sales
United States business inventories
United States Federal open market committee interest rate decision
Australia Westpac consumer confidence

Wednesday, December 14

China FDI
Japan industrial production
Switzerland producer and import prices
Great Britain jobless claims
Great Britain unemployment rate
Eurozone industrial production
Switzerland ZEW survey
Canada leading indicators
Japan Tankan manufacturing Outlook
Japan Tankan non-manufacturing

Thursday, December 15

Japan machine tool orders
Switzerland industrial production
Germany purchasing managers index
Switzerland interest rate decision
Eurozone ECB monthly report
Eurozone purchasing managers index
Great Britain inflation report
Great Britain retail sales
Eurozone consumer price index
Eurozone employment data
United States producer price index
United States current-account balance
United States Empire manufacturing
United States weekly jobless claims
United States net long term TIC Flows
United States industrial production
United States Philadelphia fed survey

Friday, December 16

Australia RBA foreign-exchange transactions
United States consumer price index

See full economic calendar here

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators trimmed their long bets of the US dollar last week, according to the latest data which shows trader positions as of December 6th. US dollar positions fell against the euro one week after speculators had increased their bearish bets against the euro to the highest level since June 2010. Speculators continued to be overall bullish in favor of the US dollar despite last week’s pullback.

Non-commercial futures traders, usually hedge funds and large speculators, decreased their short positions in the euro, British pound sterling, Canadian dollar and Mexican peso while increasing long positions in the Australian dollar and the New Zealand dollar. Japanese yen long positions edged lower while traders added to short positions in the Swiss franc.

EuroFX: Currency speculators reversed three consecutive weeks of declining positions as short positions were trimmed for the euro, according to data on December 6th. Euro short positions declined to a total of 95,814 net contracts from the previous week’s total of 104,302 net short contracts. The November 29th short position was a new low level for euro positions all year and the highest short level since June 8th of 2010 when euro short positions totaled 111,945.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: Currency speculators decreased their bearish bets of the British pound sterling as of December 6th after increasing bearish bets for three consecutive weeks. British pound positions stood at a total of 43,560 short positions on December 6th following a total of 46,660 net short positions registered on November 29th.

JPY: The Japanese yen net long speculative contracts fell slightly for a second consecutive week as of December 6th. Yen long positions declined to a total of 38,271 net long contracts reported on December 6th following a total of 40,547 net long contracts that were reported on November 29th.

CHF: Swiss franc positions fell lower for a fourth consecutive week and to a new low level all year against the dollar last week. Speculator positions for the Swiss currency futures edged down to a total of 11,158 net short contracts on December 6th following a total of 9,327 net short contracts as of November 29th. The Swiss currency has been moving in small and tight ranges in forex trading since the Swiss National Bank implemented a policy to weaken the strength of the currency which the SNB feels is overvalued.

CAD: Canadian dollar positions edged higher after declining for four consecutive weeks. CAD net contracts improved to a total of 20,171 net short contracts as of December 6th following a total of 26,869 short contracts reported on November 29th. CAD positions on November 29th were at their lowest level of the year, surpassing the previous low that was reached on October 11th when net short positions fell to 24,913.

AUD: The Australian dollar long positions surged higher and reversed three consecutive weekly declines as of December 6th. Australian dollar positions rose to a total net amount of 29,824 long contracts following a total of 12,542 net long contracts reported as of November 29th. The AUD speculative positions last week ascended to their highest level since September 13th when Australian dollar long positions totaled 36,934.

NZD: New Zealand dollar futures speculator positions edged just slightly higher last week after falling for the previous three straight weeks. NZD contracts edged up to a total of 3,857 net long contracts as of December 6th following a total of 3,718 net long contracts registered the previous week. The November 29th level had represented the lowest New Zealand dollar position level since April 5th when positions equaled 2,695 long contracts.

MXN: Mexican peso contracts rose last week after declines for two consecutive weeks that brought Mexican peso positions to a new low level for the year. Peso positions improved to a total of 20,862 net short speculative positions as of December 6th following a total of 36,240 short contracts that were reported on November 29th.

COT Currency Data Summary as of December 6, 2011
Large Speculators Net Positions vs. the US Dollar

EUR -95,814
GBP -43,560
JPY +38,271
CHF -11,158
CAD -20,171
AUD +29,824
NZD +3,857
MXN -20,862

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators heavily increased their bullish bets in favor of the US dollar and pushed their bearish bets for the euro to the highest level since June 2010.

Non-commercial futures traders, usually hedge funds and large speculators, increased their total US dollar long positions to $18.04 billion on November 29th from a total long position of $12.11 billion on November 22nd, according to the CFTC COT data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

EuroFX: Currency speculators continued to add to their short bets for the euro against the U.S. dollar for a third consecutive week as of November 29th. Euro short positions rose to a total of 104,302 net contracts from the previous week’s total of 85,068 net short contracts. Last week’s short position is a new low level for euro positions all year and the highest short level since June 8th of 2010 when euro short positions totaled 111,945.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: Currency speculators increased their bearish bets against the British pound sterling for third consecutive week as of November 29th. British pound positions fell to a total of 46,660 short positions following a total of 36,634 net short positions registered on November 22nd. The decline in British pound positions marked the lowest level since November 1st.

JPY: The Japanese yen net long speculative contracts dipped last week following three consecutive weeks of increases. Yen long positions fell to a total of 40,547 net long contracts reported on November 29th following a total of 43,180 net long contracts that were reported on November 22nd.

CHF: Swiss franc positions dropped for a third consecutive week and to a new low level all year against the dollar last week. Speculator positions for the Swiss currency futures edged down to a total of 9,327 net short contracts following a total of 5,870 net short contracts as of November 22nd. The Swiss currency has seen limited strength in Forex trading since the Swiss National Bank initiated a policy to stem the strength of their currency.

CAD: Canadian dollar positions edged lower for a fourth consecutive week as of November 29th. CAD net contracts decreased to a total of 26,869 net short contracts as of November 29th following a total of 22,144 short contracts reported on November 22nd. CAD positions are now at their lowest level of the year, surpassing the previous low that was reached on October 11th when net short positions fell to 24,913.

AUD: The Australian dollar long positions fell lower for the third consecutive week as of November 29th. Australian dollar positions declined to a total net amount of 12,542 long contracts following a total of 17,960 net long contracts reported as of November 22nd. The AUD speculative positions are now at their lowest level since October 11th when Aussie long positions total 10,753.

NZD: New Zealand dollar futures speculator positions fell sharply last week for a third consecutive week. NZD contracts declined to a total of 3,718 net long contracts as of November 29th following a total of 7,916 net long contracts registered on November 22nd. Last week’s decline brought New Zealand dollar positions to the lowest level since April 5th when positions equaled 2,695 long contracts.

MXN: Mexican peso contracts fell last week for a second consecutive week and to a new lowest level all year. Peso positions declined to a total of 36,240 net short speculative positions as of November 29th following a total of 31,582 short contracts that were reported on November 22nd.

COT Currency Data Summary as of November 29, 2011
Large Speculators Net Positions vs. the US Dollar

EUR -104302
GBP -46660
JPY +40547
CHF -9327
CAD -26869
AUD +12542
NZD +3718
MXN -36240

The latest Commitments of Traders (COT) report, released on Monday (due to last week’s holiday) by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators increased their bullish bets in favor of the US dollar and raised their bearish positions for the euro to the highest level all year as the euro debt crisis has dominated headlines.

Non-commercial futures traders, usually hedge funds and large speculators, increased their total US dollar long positions to $12.11 billion on November 22nd from a total long position of $10.13 billion on November 15th, according to the CFTC COT data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

EuroFX: Currency speculators added to their short bets for the euro against the U.S. dollar for a second consecutive week as of November 22nd. Euro short positions rose to a total of 85,068 net contracts from the previous week’s total of 76,147 net short contracts. Last week’s short position is the lowest level for euro positions all year and the highest short level since June of 2010.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: Currency speculators raised their bearish bets against the British pound sterling for second consecutive week. British pound positions fell to a total of 36,634 short positions following a total of 32,864 net short positions registered on November 15th. The two-week rise in GBP short positions follows five consecutive weeks of   improvement for the pound sterling.

JPY: The Japanese yen net long speculative contracts rose higher last week to increase for a third consecutive week. Yen long positions advanced to a total of 43,180 net long contracts reported on November 22nd following a total of 33,680 net long contracts that were reported on November 15th. Yen positions are now at their highest level since October 25th.

CHF: Swiss franc positions declined to their lowest level all year against the dollar last week. Speculator positions for the Swiss currency futures edged down to a total of 5,870 net short contracts following a total of 1,904 net short contracts as of November 15th. The Swiss currency, usually a popular safe haven currency, has continued to see limited strength in Forex trading since the Swiss National Bank initiated a policy to weaken the currency.

CAD: Canadian dollar positions edged lower for a third straight week as of November 22nd. CAD net contracts decreased to a total of 22,144 net short contracts as of November 22nd following a total of 17,215 short contracts reported on November 15th. CAD positions are heading near the lowest level of the year which was reached on October 11th when net short positions stood at 24,913.

AUD: The Australian dollar long positions decreased for the second consecutive week as of November 22nd. Australian dollar positions fell to a total net amount of 17,960 long contracts following a total of 24,330 net long contracts reported as of November 15th. The AUD speculative positions are now at their lowest level since October 11th.

NZD: New Zealand dollar futures speculator positions declined last week for a second consecutive week. NZD contracts decreased to a total of 7,916 net long contracts as of November 22nd following a total of 10,614 net long contracts registered on November 15th.

MXN: Mexican peso contracts fell last week to the lowest level all year and broke a string of three consecutive weekly improvements. Peso positions declined to a total of 31,582 net short speculative positions as of November 22nd following a total of 15,021 short contracts that were reported on November 15th. Peso positions have surpassed their previous lowest level of 27,055 short positions that was registered on October 25th.

COT Currency Data Summary as of November 22, 2011
Large Speculators Net Positions vs. the US Dollar

EUR -85068
GBP -36634
JPY +43180
CHF -5870
CAD -22144
AUD +17960
NZD +7916
MXN -31582

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators raised their bullish bets in favor of the US dollar and increased their bearish positions for the euro and the British pound sterling. Speculative positions have now totaled an overall bullish dollar bias for a 10th consecutive week.

Non-commercial futures traders, usually hedge funds and large speculators, increased their US dollar positions against the euro, British pound sterling, Australian dollar, New Zealand dollar, Canadian dollar and the Swiss franc, according to the CFTC COT data reported as of November 15th. Meanwhile, the Japanese yen and Mexican peso saw increased positions directly against the dollar for the week.

EuroFX: Currency speculators raised their short bets for the euro against the U.S. dollar as of November 15th to a total of 76,147 net short contracts from the previous week’s total of 54,257 net short contracts that were reported as of November 8th. The change in euro positions breaks a string of three consecutive weeks of improvement for euro positions.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: Currency speculators increased their bearish bets against the British pound sterling as of November 15th. British pound positions fell to a total of 32,864 short positions following a total of 29,122 short positions registered on November 8th. The rise in GBP short positions follows five consecutive weeks of declining short positions and improvement for the pound sterling.

JPY: The Japanese yen net long speculative contracts edged higher last week to gain for a second consecutive week. Yen long positions increased to a total of 33,680 net long contracts reported on November 15th following a total of 28,077 net long contracts that were reported on November 8th.

CHF: Swiss franc long positions fell back over to the short side last week after gaining a showing improvement the previous week. Speculator positions for the Swiss currency futures edged down to a total of 1,904 long net short contracts following a total of 2,162 net short contracts as of November 8th. The Swiss currency, a popular safe haven currency, has continued to see subdued movement in Forex trading since the Swiss National Bank initiated a policy to peg franc against the euro at the 1.20 level.

CAD: Canadian dollar positions edged lower for a second straight week as of November 15th. CAD net contracts decreased to a total of 17,215 short contracts as of November 15th following a total of 15,568 short contracts reported on November 8th. CAD positions are floating near the lowest level of the year which was reached on October 11th when net short positions reached 21,913.

AUD: The Australian dollar long positions decreased for the first time in five weeks as of November 15th. Australian dollar positions fell to a total net amount of 24,330 long contracts following a total of 27,016 net long contracts reported as of November 8th. The AUD speculative positions had gained four consecutive weeks before the latest data.

NZD: New Zealand dollar futures speculator positions declined last week after five straight weeks of gains. NZD contracts dipped to a total of 10,614 net long contracts as of November 15th following a total of 11,550 net long contracts registered on November 8th.

MXN: Mexican peso contracts showed improvement for a third consecutive week as of November 15th and increased to their highest level since early September. Peso positions edged up to a total of 15,021 net short speculative positions as of November 15th following a total of 18,067 short contracts that were reported on November 8th.

COT Currency Data Summary as of November 15, 2011
Large Speculators Net Positions vs. the US Dollar

EUR -76147
GBP -32864
JPY +33680
CHF -1904
CAD -17215
AUD +24330
NZD +10614
MXN -15021

The key fundamental economic events that can strongly influence the forex market this week feature the U.S. inflation and Retail Sales data, the BOJ Rate Decision and the UK Employment Report. Those key economic releases and others due out during this week are detailed further below, with the current market consensus expectations or the last result included in parenthesis whenever available.

The coming week’s highlights start on Monday with U.S. Existing Home Sales (4.82M). Tuesday then offers N.Z. Inflation Expectations (last 2.9%), UK Public Sector Net Borrowing (4.3B) and Canadian Core Retail Sales (0.4%), as well as the release of the highlighted U.S. Preliminary GDP (2.5%) and FOMC Meeting Minutes.

Wednesday is a Japanese Bank Holiday, and the market will closely monitor the Chinese HSBC Flash Manufacturing PMI (last 51.0), UK MPC Meeting Minutes (0-0-9), U.S. Core Durable Goods Orders (0.1%) and Weekly Initial Jobless Claims (387K).

Thursday is the U.S. Thanksgiving Day Bank holiday and its key data releases include the German Ifo Business Climate survey (105.5) and UK Revised GDP (0.5%). That will conclude the week’s highlights since Friday has no notable economic data releases or events scheduled.

Technical Forex Market Outlook for the Upcoming Week

EUR/USD:

Weekly Forecast: Higher

Resistance: 1.3557, 1.3614, 1.3795/98, 1.3813/27, 1.3854/58, 1.3868, 1.3973, 1.4246, 1.4258, 1.4279, 1.4327 and 1.4499/1.4503.
Support: 1.3495, 1.3483, 1.3450, 1.3437, 1.3422, 1.3360, 1.3333, 1.3241/44, 1.3145, 1.3055, 1.3000 and 1.2968.

200-day MA: 1.4100 and flat.

14-day RSI: 43.2 and falling.

USD/JPY:

Weekly Forecast: Somewhat lower

Resistance: 77.00, 77.25/89, 78.66, 79.05, 79.40, 79.52, 79.96, 80.00, 80.22, 80.82, 81.34, 81.76, 82.01/22, 82.77, 83.09 and 83.77.

Support: 76.57, 76.41, 76.10, 75.94, 75.70, 75.65, 75.56, 75.00 and 70.00 likely.

200-day MA: 79.57 and falling.

14-day RSI: 44.9 and falling.

GBP/USD:

Weekly Forecast: Higher

Resistance: 1.5868/90, 1.5912/19, 1.5932, 1.5945, 1.5977, 1.6000, 1.6093, 1.6130/65, 1.6206, 1.6259, 1.6332/47, 1.6434/73, 1.6500/98 and 1.6616.

Support: 1.5745, 1.5691, 1.5630/85, 1.5525/31, 1.5483, 1.5422, 1.5373, 1.5339/55, 1.5326, 1.5293, 1.5270, 1.5123 and 1.5000.

200-day MA: 1.6130 and falling slightly.

14-day RSI: 45.8 and falling.

USD/CHF:

Weekly Forecast: Lower

Resistance: 0.9156, 0.9180, 0.9198, 0.9236, 0.9277/0.9339, 0.9368 and 0.9774/83.

Support: 0.9149, 0.9139, 0.9080/85, 0.8979, 0.8951/58, 0.8916/26, 0.8873/83, 0.8804, 0.8797, 0.8788, 0.8760/68, 0.8727, 0.8649, 0.8622, 0.8566 and 0.8536.

200-day MA: 0.8695 and falling.

14-day RSI: 59.3 and rising.

AUD/USD:

Weekly Forecast: Higher

Resistance: 1.0052, 1.0100/16, 1.0184, 1.0201/29, 1.0303/70, 1.0444/98, 1.0608, 1.0654 and 1.0718/84.

Support: 1.0000, 0.9983, 0.9964, 0.9925, 0.9863, 0.9732, 0.9689, 0.9667, 0.9651, 0.9620/27, 0.9536/41 and 0.9500.

200-day MA: 1.0415 and flat.

14-day RSI: 40.2 and falling.

USD/CAD:

Weekly Forecast: Lower

Resistance: 1.0302, 1.0337, 1.0417, 1.0481/90, 1.0500, 1.0506, 1.0646/56, 1.0669, 1.0742, 1.0756, 1.0785, 1.0853, 1.0868, 1.1000 and 1.1101/23.

Support: 1.0262/87, 1.0210/33, 1.0172/99, 1.0132/42, 1.0105, 1.0075, 1.0053, 1.0026/30, 0.9969, 0.9934, 0.9891, 0.9828/77, 0.9763/96, 0.9734/39, 0.9724, 0.9686 and 0.9645.

200-day MA: 0.9827 and rising slightly.

14-day RSI: 56.3.0 and rising slightly.

NZD/USD:

Weekly Forecast: Higher

Resistance: 0.7605/72, 0.7723/41, 0.7795, 0.7804, 0.7855/59, 0.7881/88, 0.7955/96, 0.8066/93, 0.8109/90 and 0.8240.

Support: 0.7549/52, 0.7523, 0.7504, 0.7500, 0.7453/67, 0.7426, 0.7404, 0.7342, 0.7321, 0.7189, 0.7115, 0.7000 and 0.6945/62.

200-day MA: 0.7989 and flat.

14-day RSI: 33.7 and falling.

Today, I am pleased to share a forex interview with currency analyst Christopher Vecchio from DailyFx.com on the latest currency market major events and trends. Christopher studies fundamental analysis of the foreign exchange markets by examining the interrelationship between geopolitical events, macroeconomic trends, and finance while also incorporating technical analysis into his research in order paint the most complete picture of what is occurring across various asset classes in the short-term and medium-term.

As the euro crisis deepens and as new developments continue to unfold, what markets and/or indicators are you watching to best anticipate what may be happening next and where things are going?

The Italian bond market has been a good indicator. As the 10-year yield has ticked higher, the EUR/USD has weakened; when there are signs of relief and bond yields trade lower, the EUR/USD has found support. Italy really is the key for Europe: the European Financial Stability Facility is not large enough to save Italy. Given the current course of action, if Italy loses the ability to fund itself at favorable rates, the Euro-zone will enter a terminal tailspin.

Considering all the things happening in Europe and the uncertainty of it all, do you feel that the EUR/USD is overvalued at the moment as it hovers around the 1.38 threshold? How about the EUR/JPY?

I think that the Euro should be lower against the safe haven currencies (including the Swiss Franc, but the Swiss National Bank says otherwise), and the recent rate cut by the European central bank supports this notion. The decreased yield on Euro-denominated assets takes away some of its appeal in terms of interest rate differentials, and the Euro-zone sovereign debt problems – which have in turn raised the question about the future stability of the common market – only compounds the impediments the Euro has to appreciate in value against the other majors.

In terms of the direction of the EUR/USD and EUR/JPY, both pairs are looking lower for the medium-term. Any rallies we’ve seen have been reversed, with good reason: the current measures in place are ineffective and the continued implementation of them has not solved the crisis – it has only gotten worse. The only way the Euro sees a sharp bounce against the Yen in the near-term is if the Bank of Japan or Ministry of Finance intervenes to weaken the Yen again (though these interventions have been unwound in
days if not hours against the majors save the U.S. Dollar).

In terms of the U.S. Dollar, the short-term liquidity issues in Europe have boosted demand for the Greenback, and given the state of the U.S. economy relative to that of the Euro-zone, the U.S. Dollar is poised to strengthen further. The only impediment to a weaker EUR/USD over the near-term would be the Federal Reserve announcing another round of quantitative easing. During the last round of debt monetization, from November 2010 through the end of June 2011, the U.S. Dollar was the worst performing major currency, falling 18.00 percent against the Swiss Franc and 4.38 percent against the Euro. However, given the Federal Reserve’s outlook, another round of easing appears off the table, for now.

The US economy added 80,000 jobs last month with positive revisions for both the September and August numbers (both months now over at least 100,000 jobs created and a 12-month average gain of 125,000 jobs). Do you think the economy is finding its footing and is on a path to some meaningful employment increases or do you feel the economy has more obstacles to overcome?

The recent revisions to labor market data have been positive, but that doesn’t mean the jobs market is actually improving. Beyond the jobs market, there are larger underlying issues that could easily result in the economy deteriorating once more. First and foremost, the Euro-zone crisis threatens to drag under American financial institutions, which would of course pull the global economy back under ala 2008.

Isolating the United States, the most recent gross domestic product reading suggests that growth may have peaked in the third quarter. The key figures to note are the spending figures, as consumption represents approximately 70 percent of the headline growth figure. Consumer spending increased by 2.4 percent in the third quarter, a welcomed development, but the trend is unsustainable: the savings rate dropped to 4.1 percent – its lowest in over two years – while income adjusted for inflation fell by 1.7 percent. If consumers are losing purchasing power and income is eroding, there will be a point in time – likely in the coming quarters – when spending plummets.

When this occurs, there will likely be another downturn in employment. The Federal Reserve’s policies haven’t been able to prop up the labor market and injecting further U.S. Dollars into the financial system will weigh heavier on inflation adjusted income, further reducing the consumer spending figure. Fiscal policy is needed to help support job growth, but given the current path Congress has chosen, President Barack Obama’s jobs plan is unlikely to provide the support the labor market desperately needs.

The Bank of Japan intervened in the forex market to weaken the yen and we saw the USD/JPY spike to over 79.52. The USD/JPY has now slid back down under 78 and towards a support level at 77.50. Do you think we could see this pair on its way back to the 80 level without BOJ intervention?

It’s unlikely that we see the USD/JPY rise back to the 80.00 exchange rate figure naturally. Questions over U.S. fiscal and monetary policy have fueled the U.S. Dollar’s decline against the Japanese Yen, even though Japan faces its own mountain of debt and policy issues.

Historically, at least for the past three interventions (March 18, August 4 and October 31), the Yen has gained back all of its losses within a few weeks maximum. For the most recent two interventions, the move to weaken the Yen was unwound within a matter of hours to days against the major currencies, save the U.S. Dollar. That being said, given the deteriorating state of global sentiment, I fully expect the Bank of Japan and/or the Ministry of Finance to step into the markets in the next few weeks, a decision that would easily drive the USD/JPY back above 80.00.

The Reserve Bank of Australia cut its interest rate last week for the first time in two years to 4.25% with the possibility of more rate reductions to come. With yield being an attractive aspect of the Aussie, are you looking for Aussie weakness over the short to medium time horizon?

I expect the Australian Dollar to continue to show signs of weakness in the periods ahead, and the rate cut is only part of the reason why. The shrinking interest rate differential between the Aussie and the other major currencies caps its upside potential in the coming periods, as there is now less incentive to buy Aussie-denominated assets. As such, it would be a shock to me to see the AUD/USD trade near its all-time highs set in July above the 1.1000 figure.

Furthermore, the European debt crisis has boosted demand for liquidity, which translates into demand for the U.S. Dollar. As the European crisis drags on and uncertainty builds, there will be higher demand for the U.S. Dollar, similar to the flight to safety during late 2008 and early 2009; this goes in hand with capital flight from speculative assets, which the Australian Dollar could be considered a part of. All in all, the fundamental forecast for the Australian Dollar is far from ideal.

The Swiss franc/Euro exchange rate has been successfully kept above the the 1.20 mark by the Swiss National Bank since their policy implementation of a minimum exchange rate level. Do you agree with a recent SNB official saying the Swiss currency is still highly overvalued at current levels? And do you feel it is likely the SNB will move the minimum exchange rate level to the 1.30 level that has been mentioned lately?

The Swiss National Bank was ‘forced’ to implement a currency floor on the EUR/CHF back on September 6, after the Swiss Franc rallied to near-parity against the Euro in early August. The SNB cited a severely damaged export sector due to Franc strength as the reason to intervene in the markets, and officials continue to cite the Franc’s strength as a reason the economy is slowing.

There has been chatter that another hike could be in store, and while in the near-term that looks unlikely, as the 1.2000 floor hasn’t really come under that much pressure. If the Euro-zone debt crisis accelerates faster-than-expected, however, without question the SNB will raise the floor to a minimum of 1.2500 EUR/CHF to prevent speculative investments in the Franc.

It’s worth noting that unlike the British Pound peg in the early 1990s, in which the Bank of England was forced to prop up the value of the Sterling, the SNB is trying to devalue its currency. This means that all they need to do is print more currency. The SNB has the ability to print a theoretically unlimited number of Francs, so holding the floor at 1.2000, 1.3000 or even higher should be no problem going forward.

Thank you Christopher for taking the time for participating in this week’s forex interview. To read Christopher’s latest currency analysis and trading strategies you can visit DailyFx.com.

The key fundamental economic events that can strongly influence the forex market this week feature the U.S., Chinese and Canadian Trade Balances, the Australian Employment Report, and the BOE Rate Decision. Those key economic releases and others due out during this especially busy week are detailed further below, with the current market consensus expectations or the last result included in parenthesis whenever available.

The coming week’s highlights start on Monday with Australian ANZ Job Advertisements (last -2.1%) and UK Halifax HPI (0.1%). Tuesday features the Aussie Trade Balance (3.04B), UK Manufacturing Production (0.2%), Canadian Housing Starts (201K) and a speech by Swiss National Bank Chairman Hildebrand.

On Wednesday, the market will closely monitor Aussie Home Loans (1.7%), Chinese CPI (5.4%), a speech by U.S. Fed Chairman Bernanke and the RBNZ Financial Stability Report.

Thursday’s highlights include the Aussie Employment Change (10.3K) and Unemployment Rate (5.3%) and the tentatively scheduled Chinese Trade Balance (26.3B). Also out Thursday is the featured BOE Rate Decision, including the Official Bank Rate Decision (0.50%), the Asset Purchase Facility (275B) and a tentatively scheduled MPC Rate Statement, as well as the Canadian Trade Balance (-0.5B), the U.S. Trade Balance (-46.1B) and Weekly Initial Jobless Claims (402K).

The end of the week is relatively quiet, with bank holidays in France, Canada and the United States on Friday. Economic data highlights due out include UK PPI Input (0.0%) and the U.S. Preliminary University of Michigan Consumer Sentiment survey (61.1).

Technical Forex Market Outlook for the Upcoming Week

EUR/USD:

Weekly Forecast: Somewhat higher
Resistance: 1.3798, 1.3827, 1.3854, 1.3868, 1.3973, 1.4246, 1.4258, 1.4279, 1.4327,
1.4499/1.4503, 1.4548/74, 1.4695 and 1.4939.
Support: 1.3720/43, 1.3710, 1.3652/97, 1.3607, 1.3565, 1.3520/24, 1.3450, 1.3360,
1.3333, 1.3241/44, 1.3145, 1.3055, 1.3000 and 1.2968.
200-day MA: 1.4103 and rising slightly.
14-day RSI: 48.6 and flat.

USD/JPY:

Weekly Forecast: Somewhat lower
Resistance: 78.66, 79.05, 79.40, 79.52, 80.00, 80.22, 80.82, 81.34, 81.76, 82.01/22,
82.77, 83.09 and 83.77.
Support: 77.25/89, 76.41, 76.10, 75.94, 75.70, 75.65, 75.56, 75.00 and 70.00 likely.
200-day MA: 79.77 and falling.
14-day RSI: 64.1 and flat.

GBP/USD:

Weekly Forecast: Higher
Resistance: 1.6040, 1.6059/62, 1.6130/64, 1.6204/06, 1.6252/59, 1.6332/47, 1.6434/73,
1.6500/98 and 1.6616.
Support: 1.6000, 1.5977, 1.5945, 1.5912/19, 1.5839/89, 1.5630/85, 1.5525/31, 1.5483,
1.5422, 1.5373, 1.5339/55, 1.5326, 1.5293, 1.5270, 1.5123 and 1.5000.
200-day MA: 1.6139 and flat.
14-day RSI: 57.8 and flat.

USD/CHF:

Weekly Forecast: Somewhat lower
Resistance: 0.8873/83, 0.8916/26, 0.8958, 0.8979, 0.9080, 0.9180, 0.9277/0.9339,
0.9368, 0.9774/83, 0.9971, 0.9997, 1.0000 and 1.0065.
Support: 0.8804, 0.8797, 0.8788, 0.8760, 0.8727, 0.8649, 0.8622, 0.8566, 0.8536,
0.8239 and 0.8000.
200-day MA: 0.8717 and falling.
14-day RSI: 51.0 and rising.

AUD/USD:

Weekly Forecast: Somewhat higher
Resistance: 1.0444/98, 1.0608, 1.0654, 1.0718/26, 1.0730, 1.0751, 1.0763, 1.0784,
1.0909, 1.1000, 1.1015, 1.1064 and 1.1079.
Support: 1.0313/70, 1.0229, 1.0201, 1.0116, 1.0100, 1.0012, 1.0000, 0.9983, 0.9925,
0.9863, 0.9732, 0.9689, 0.9667, 0.9651, 0.9620/27, 0.9536/41 and 0.9500.
200-day MA: 1.0413 and rising.
14-day RSI: 53.4 and flat.

USD/CAD:

Weekly Forecast: Somewhat lower
Resistance: 1.0132/42, 1.0210/33, 1.0262/71, 1.0337, 1.0417, 1.0481/90, 1.0500 and
1.0506, 1.0646/56, 1.0669, 1.0742, 1.0756, 1.0785, 1.0853, 1.0868, 1.1000 and 1.1101/
23.
Support: 1.0105, 1.0053, 1.0026/30, 0.9969, 0.9934, 0.9891, 0.9828/77, 0.9763/96,
0.9734/39, 0.9724, 0.9686, 0.9645, 0.9567, 0.9526, 0.9496, 0.9448/56, 0.9422, 0.9405/
09, 0.9056 and 0.9000.
200-day MA: 0.9812 and rising slightly.
14-day RSI: 52.1 and rising.

NZD/USD:

Weekly Forecast: Somewhat higher
Resistance: 0.7955/94, 0.8066/93, 0.8109/90, 0.8240, 0.8269/78, 0.8327/39, 0.8365/86,
0.8423, 0.8469/72, 0.8500, 0.8534/75, 0.8676, 0.8764, 0.8793 and 0.8841.
Support: 0.7881/88, 0.7855/59, 0.7804, 0.7795, 0.7741, 0.7605/72, 0.7549, 0.7523,
0.7504, 0.7500, 0.7453/67, 0.7426, 0.7404, 0.7342, 0.7321, 0.7189, 0.7115, 0.7000 and
0.6945/62.
200-day MA: 0.7988 and rising.
14-day RSI: 48.1 and flat.

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators raised their bullish positions in favor of the US dollar as bets against the Japanese yen increased sharply following the Bank of Japan intervention to weaken the Japanese yen in the Forex market last week. Speculative positions have now totaled an overall bullish dollar bias for an eighth week.

Non-commercial futures traders, usually hedge funds and large speculators, increased their total US dollar long positions to $9.87 billion on October 25th from a total long position of $8.92 billion on October 25th, according to the CFTC COT data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

EuroFX: Currency speculators decreased their short bets for the euro against the U.S. dollar as of November 1st to a total of 60,060 net short contracts from the previous week’s total of 76,512 net short contracts that were reported as of October 25th. The change in euro positions shows that positions have broken out of the close range they were hovering in for about a month ranging between 73,795 short positions on October 11th and the most recent low of 82,697 short positions on October 4th.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: British pound sterling positions have now increased for four consecutive weeks following their six-week decline, according to the data as of November 1st. Pound positions increased to a total of 47,092 net short positions on October 25th following a total of 50,147 short positions as of November 1st. The four-week advancement has brought net short positions from their low point on October 4th of 68,724 to just over 47,000 net short positions last week.

JPY: The Japanese yen net long speculative contracts fell sharply lower last week to the lowest level since July following an increase the previous week. Yen long positions declined by more than half in number to a total of 25,904 net long contracts reported on November 1st following a total of 54,279 net long contracts that were reported on October 25th. The latest data follows the Bank of Japan intervention in the currency markets to weaken the yen against the US dollar and marks the lowest level since July 5th when large speculators net long positions equaled 14,327.

CHF: Swiss franc long positions continued to show little movement by edging lower and staying over on the short side for a third consecutive week. Speculator positions for the Swiss currency futures edged down to a total of 1,746 net short contracts following a total of 1,203 net short contracts as of October 25th. The Swiss currency, a popular safe haven currency, has seen decreased volatility in Forex trading since the Swiss National Bank initiated a policy to peg franc against the euro at the 1.20 level.

CAD: Canadian dollar positions increased higher for a third straight week coming off the lowest bearish level of the year reached on October 11th. CAD net contracts increased to a total of 14,820 short contracts as of November 1st following a total of 17,923 short contracts reported on October 25th. CAD positions reached the lowest level of the year on October 11th when net short positions reached 21,913.

AUD: The Australian dollar long positions increased for the third consecutive week as of November 1st and reached the highest level since September 13th. Australian dollar positions increased to a total net amount of 25,866 long contracts following a total of 23,071 net long contracts reported as of October 25th. The AUD speculative positions have gained four out of the last five weeks after reaching the lowest point of the year on September 27th at 5,167 net long contracts.

NZD: New Zealand dollar futures speculator positions increased for a fourth consecutive week and reached the highest level since September 20th. NZD contracts advanced higher to a total of 10,655 net long contracts as of November 1st following a total of 9,219 net long contracts registered on October 25th.

MXN: Mexican peso contracts edged very slightly higher as of November 1st and off of the lowest level all year registered the week prior. Peso positions edged up to a total of 26,588 net short speculative positions as of November 1st following a total of 27,055 short contracts that were reported on October 25th. Peso contracts have been in a rather tight range for the five consecutive weeks essentially ranging between 25,000 and 27,000 net short contracts.

COT Currency Data Summary as of November 1, 2011
Large Speculators Net Positions vs. the US Dollar

EUR -60060
GBP -47092
JPY +25904
CHF -1746
CAD -14820
AUD +25866
NZD +10655
MXN -26588

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators decreased their bullish positions in favor of the US dollar as bets in favor of the Japanese yen soared. Despite last week’s decline, speculative positions have now totaled a bullish dollar bias for a s seventh straight week.

Non-commercial futures traders, usually hedge funds and large speculators, diminished their total US dollar long positions to $8.92 billion on October 25th from a total long position of $14.86 billion on October 18th, according to the CFTC COT data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

EuroFX: Currency speculators slightly decreased the short bets for the euro against the U.S. dollar as of October 25th to a total of 76,512 net short contracts from the previous week’s total of 77,220 net short contracts that were reported as of October 18th. The slight change in euro positions shows that positions have been in a close range for about a month ranging between 73,795 short positions on October 11th and the most recent low of 82,697 short positions on October 4th.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: British pound sterling positions have increased for three consecutive weeks after their six-week decline, according to the data as of October 25th. Pound positions increased to a total of 50,147 net short positions on October 25th following a total of 53,226 short positions as of October 18th. The three-week improvement has brought net short positions from a low point on October 4th of 68,724 to just over 50,000 net short positions last week.

JPY: The Japanese yen net long speculative contracts surged higher after decreasing for two consecutive weeks and falling the lowest level since July. Yen long positions more than doubled in number to a total of 54,279 net long contracts reported on October 18th following a total of 26,907 net long contracts that were reported on October 18th. The latest data marks the highest level since August 2nd when large speculators net long positions equaled 58,833.

CHF: Swiss franc long positions edged a bit higher and stayed over on the short side for a second consecutive week. Speculator positions for the Swiss currency futures edged up to a total of 1,203 net short contracts following a total of 2,243 net short contracts as of October 18th. The Swiss currency, a popular safe haven currency, has seen decreased volatility in Forex trading since the Swiss National Bank initiated a policy to blunt the strength of the franc and maintain a peg against the euro at the 1.20 level.

CAD: Canadian dollar positions increased higher for second straight week coming off the lowest bearish level of the year. CAD net contracts slightly rose to a total of 17,923 short contracts as of October 25th following a total of 24,795 short contracts reported on October 18th. CAD positions hit the lowest level of the year on October 11th when net short positions reached 21,913.

AUD: The Australian dollar long positions increased for the second consecutive week as of October 25th and reached its the highest level in a month. AUD positions rose to a total net amount of 23,071 long contracts following a total of 20,353 net long contracts reported as of October 18th. The Aussie dollar positions have gained three out of the last four weeks after reaching the lowest point of the year on September 27th at 5,167 net long contracts.

NZD: New Zealand dollar futures speculator positions increased for a third consecutive week as of October 25th. NZD contracts advanced higher to a total of 9,219 net long contracts as of October 25th following a total of 8,225 net long contracts registered on October 18th.

MXN: Mexican peso contracts edged very slightly lower as of October 25th to the lowest level all year. Peso positions edged down to a total of 27,055 net short speculative positions as of October 25th following a total of 24,129 short contracts that were reported on October 18th. Peso contracts have been in a rather tight range for four consecutive weeks essentially ranging between 25,000 and 27,000 net short contracts.

COT Currency Data Summary as of October 25, 2011
Large Speculators Net Positions vs. the US Dollar

EUR -76512
GBP -50147
JPY +54279
CHF -1203
CAD -17923
AUD +23071
NZD +9219
MXN -27055