The latest CFTC Commitment of Traders report covers the five sessions through January 26, the day before the FOMC concluded its two-day meeting and three days before the BOJ’s announcement. Speculators hardly changed their positioning during the period. There were no gross position adjustments that we would call significant (a bar we set at 10k contracts).
Due to the holidays, the CFTC has been releasing its Commitment of Traders report late. With this week’s report, the normal Friday release schedule resumes. The latest report covers the shortened week through January 5. It is not surprising to find that speculative position adjustments were minor.
There was only one gross position adjustment of more than 8k contracts, and that was the long yen. Speculators increased their holdings by half to 67.5k contracts from 45k.
Two mortgage firms largely under government control create a new financial instrument similar to those that caused the global financial crisis of 2008. Fannie Mae and Freddie Mac, two mortgage loan companies that provide government-guaranteed mortgages to American homebuyers, announced a new financial instrument that it hopes would offset risks in the financial market.
Both firms, which are government-sponsored enterprises, are producing two new derivative instruments based on collected mortgages that will theoretically reduce risk to American taxpayers.
Speculative position adjustments in the currency futures were minimal in the immediate aftermath of the ECB’s December 3 meeting and US employment data the following day. However, activity dramatically increased in the days ahead of the FOMC meeting on December 16.
Activity increased during the Commitment of Traders reporting week ending 8 December. There were four significant (10k+ contracts) gross currency adjustments by speculators. Given that this period covers the second largest gain in the euro’s history, it is surprising that it did not meet the threshold. It is astounding that speculators added only 1.8k contracts to their gross long position
The continued build of short currency futures positions characterizes the changes in the speculative positioning. All the currency futures we track saw an increase in gross short positions. This is what drove the large net short positions. One thing this means is that late shorts are in weak hands, and as we have seen in the Australian dollar, vulnerable to a squeeze.
In the Commitment of Traders reporting week ending November 10 covers the few days before the US employment data and a few days after. Speculative participants made five significant (10k contracts or more) adjustments to gross positions in the currency futures. The prior reporting period saw only three significant adjustments, and in growing gross short euro, yen, and Swiss franc positions.
It is difficult to make much sense of the short-term price action in the foreign exchange market based on or spurred by this or that headline about Greece. On the week, the euro lost about 0.6% against the dollar but outperformed the other major currencies save the yen. The yen gained nearly 1% against the dollar, the only major currency to do so.
Most investors are familiar with the more traditional forms of investing, such as stocks and bonds. However, an increasing number of investors desire alternative assets with which to grow their money.
