Yen Bulls Cut Longs For Second Week, Aussie Bulls Begin Taking Profits Too

Speculators in the futures market continued to pare short foreign currency positions but were cautious about expanding long positions in the CFTC reporting week ending May 3.  In fact, two of the three largest adjustments were the cutting of gross long Japanese yen and Australian dollar positions.  

Speculators took profits on 11.8k contracts of gross long yen positions, leaving 85.6k contracts still long.  It was the second consecutive week that gross long yen positions were reduced.  The magnitude of the move was the second largest of the year.  It may be particularly noteworthy that the longs were cut as the dollar dropped over the reporting period from JPY111.30 to JPY105.50. 

The speculative gross long Australian dollar futures position was cut by 10.9k contracts, leaving the bulls with 99k contracts at the end of the statement period. The decline in the Australian dollar after the end of the reporting period suggests the unwinding likely continued. The gross long position remains at elevated levels,  which outside of the previous week, is the largest in three years.  

The euro was the exception. Speculators added 14k contracts to lift the gross long euro position to 113k contracts.  It is the largest increase in three months. The speculative flows may have helped the euro poke through the $1.16 level in the spot market. However, the late longs are in weak hands; the euro shed almost 2.5 cents from its highs after the statement period ended.

Speculators continued to cover short foreign currency positions. The were no exceptions about the eight currency futures we track.  The adjustment, however, were small, averaging about 3.8k contracts. Outside of the liquidation of gross long yen and Australian dollar positions, the only other currency in which the speculators reduced long positions was the Swiss franc. There speculators tripped the gross long holdings by 2.7k contracts, leaving them with 21.3k.