The CFTC Report- Yen Net Short Position Declines for one more week- 28.01.2014

Based on the latest report by Commodity Futures Trading Commission (CFTC) investors have been modifying their positioning in the currency market. After the emerging markets sell off, net position on the Euro against the US dollar returned to positive territory as we see at Net Long/Short Positions chart. The Euro $2.4 billion Net Long is coupled $2.29 billion Net Long on GBP, the rest of the currencies have a Net Short position. The latter is also exhibited on LONG/SHORT RATIO table where we see that firstly the GBP has the highest ratio followed by Euro, moreover the lowest Long/Short ratio is with the Japanese Yen because of the huge short positioning still in place.

Let’s look at the weekly changes where the modifications are revealed. Biggest weekly change has been on the Euro and the Japanese Yen. Risk aversion led investors to safer assets like the Yen and at the same time drove them away from AUD. Additionally, capital outflow from emerging markets benefited advanced economies, like Euro and GBP who exhibited a positive weekly change.

Nonetheless the Japanese Yen still maintains the largest net short position at $10.55 billion however in the recent weeks the USDJPY attempts to reverse its uptrend as the Yen recovers and weekly net positioning is positively changing. We would expect to see further recovery of the Japanese Yen.

Elsewhere, we see the Australian dollar building further its net short position, though not much, to $5.8 billion. The Long/Short ratio declining to 3% and that was coupled by AUDUSD printing three and a half freshly lows at 0.8662.

To sum up traders increased their bearish positions on the Australian dollar only. They have reversed bearish position to bullish for the Euro. The British pound increased its Net Long position while Net short positions moderateted for the Swiss franc, the Japanese Yen and the Canadian.