Latest CFTC Release Dated August 15th, 2006:
· Cable Traders Add To Long Positions
· Aussie Positioning Remains Extreme
US Dollar Index: Implied positioning is nearing extreme levels (short USD) although USD shorts remained virtually the same from one week ago. If specs continue to short dollars, then we would likely see a bottoming out in the dollar.
EUR: Speculators cut longs a small amount last week (which was a record setting week for euro longs). Speculators have been building longs since flipping to net long back in December 2005. Extremely long speculator positioning points to a topping out in the Euro over the coming weeks. Commercial buying is very low (at the 8th percentile when measured against commercial buying for the last 52 weeks), which indicates a future weakening in the pair.
GBP: Long GBP positioning increased for the 7th week in a row. Traders are the longest they have been and the difference in positioning between speculators and commercials is also the longest it has ever been. The interpretation is the same as it is for the euro. That is, the extreme positioning favors a topping out in GBP over coming weeks.
CHF: CHF speculators increased short positionis for the second week in a row. This is indicative of the choppy trading that we have seen in USD/CHF lately. There is little to gather from the data though since speculators positioning is not extreme.
JPY: Speculators increased short Yen positions for the second week in row. The difference between speculative and commercial positioning is nearing extreme levels (71st percentile when measured against the last 52 weeks). Commercial buying has picked up as well. Commercial longs are at the 63rd percentile this week (over the last 52 weeks). Once we get stronger commercial buying, the probability increases that we will see a strengthening Yen.
CAD: Specs remained long CAD a week after flipping from short to long. Similar to CHF, CAD has traded in a choppy fashion lately. Well see how the data comes in next week. If specs begin to build CAD longs, then some CAD strength is likely. If specs flip back to CAD short, then CAD weakness is more likely going forward.
AUD: Positioning remains extreme, as specs added to long positions for the 7th time in the last 8 weeks. Further, commercial buying is very low in just the 3rd percentile. This should be a warning that AUD/USD could turn violently to the downside after rallying significantly 4 out of the last 5 weeks. (Notice the spike in long positioning at each top in the chart above).
