Latest CFTC Release Dated August 1st, 2006:
· Pound Positioning Reaches Extreme Levels
· Traders Increase AUD Longs
US Dollar Index: Specs flipped back to net short and implied short positioning increased significantly. Implied positioning is -96,751, which is close to extreme levels. The most extreme implied positioning was at the end of May 2006 when implied were short 214,348. As US dollar sentiment becomes more negative, be wary of a potential bottom (in the USD).
EUR: Euro specs increased longs significantly after selling euros for the previous two weeks. The difference between specs and commercials is in the 80th percentile when measured against the last 26 weeks. This is close to extreme readings and suggests that the euro is topping out in the coming weeks.
GBP: Demand for Pounds also skyrocketed as specs added over 22,344 to in long positions. The difference between specs and commercials is over 100,000 for the first time since 3/8/2005 when GBP/USD topped out at 1.9324. This data suggests that GBP may be topping out as well over the coming weeks or months. (Positioning can remain extreme for quite a while).
CHF: CHF speculators cut back on short CHF positions buying 11,566 to bring positioning to -9,394. Soecs have been short CHF for the last 8 weeks but are close to flipping to long as CHF has strengthened (against the USD at least). The difference between specs and commercials is not extreme and therefore little can be gained from analyzing this weeks data.
JPY: Yen speculators cut shorts a week after being short the largest amount of JPY ever. This is exactly what we look in a longer term turn. The extreme readings were at the height of JPY weakness and the turn was violent (in USDJPY). The bullish JPY case is bolstered if speculators continue to buy JPY and eventually flip to long.
CAD: Specs remained net short CAD for the second week in a row and added 1,997 to short positions. Commercials also remain short, albeit a small amount. The fact that specs and commercials are on the same side of the market is indicative of the tight range trading of late.
AUD: Positioning remains extreme as specs added to AUD longs by 4,721. The difference between specs and commercials is the largest since September 2005 when AUDUSD reversed at .7762. If the situation plays out in similar fashion here, the the next big AUD move is down.
