Originally published by AxiTrader
Welcome to my new look at positioning data which I'll put out every Monday morning on the back of the release late Friday in New York of the CFTC positioning data. In this report I'll be looking at how positioning has impacted or may influence price action in the week and weeks ahead.
In Summary.
The CFTC data for the week to last Tuesday - May 23 - shows that in forex markets net positions in CAD shorts hit a new high, euro longs climbed to the highest level since 2013, pounds shorts continue to be cut, and Australian dollar longs have been largely erased.
Elsewhere WTI crude oil longs increased a little, the market increased its net long gold position and took the mega-long net US 10-year Treasury position to a new level.
Some details.
This week the big news is that CAD shorts increased again to a net position of 99,109. That's up sharply from a net short of 42,642 just 4 weeks ago and a huge turnaround from the net long CAD position of 30,090 12 weeks ago.
That increase in net shorts is even though USD/CAD has been falling. Although it did bounce off a six-month trendline last week.
The Euro's climb to the highest level since the US presidential election last November has been accompanied by the continued increase in net long positions. That position of long 64,845 has taken euro to the net longest those traders the CFTC calls "non-commerical" traders have been since late October 2013.
It's natural for positioning to rise with the movement in price action - although recent moves in USD/CAD might belie that - so this euro long reflects that. But it also offers a potential vulnerability if prices fall below my current target - and the 38.2% of the recent move - at 1.1100.
The Aussie dollar has had the vast majority of what was a reasonably big net long position, in the context of recent years, washed away with only 2,635 contracts reported net-long for non-commercials by the CFTC as at last Tuesday.
That's a big turnaround from plus 42,702 just four weeks ago and, for me at least, reflects both the Aussie dollar's downtrend and a rerating of Australia and its economy at present.
The reduction in longs reduces some of the selling pressure if the Aussie dollar falls back through 74 cents, or toward the important 0.7330 support zone. But it does not mean the Aussie is out of the woods. Rather I would characterise this data as suggesting Aussie dollar traders are waiting on the data over the next week and a half and will react to the message it sends about the economic outlook.
Have a great day's trading.