Euro Longs New All-Time High for Third Consecutive Week

Latest CFTC Release Dated April 24th , 2007:

The charts used to interpret the Commitment of Traders data now include both net positioning and the percentile indicator. The percentile indicator value is the current net positioning as a percentile when measured against the last 52 weeks. A reading above 90 indicates extreme bullishness and a reading below 0 extreme bearishness. Market turns occur at extreme levels of optimism and pessimism (bottoms at pessimism and tops at optimism). Therefore, readings close to 100% and 0% indicate increased potential for a top / bottom. Speculative interest (this week’s percentile reading adjusted in order to fit between -100% and 100%) is plotted below for each currency.

US Dollar Index: Implied net short dollar positioning increased for the third week in a row. The larger trend remains towards dollar weakness as implied positioning remains well below its 12 week moving average. However, the percentile indicator and implied short positioning is close to levels where the USD index has formed significant bottoms, so be wary of at least a correction starting soon.

EUR: Euro net longs increased last week to a new record. This is the third week in a row that speculators have set a new record for long positions. This action looks like a blowoff top, similar to the ones that occurred in December and May 2006. With sentiment one-sided, the risk of a reversal is the highest that it has ever been.

GBP: Net longs increased for the second week in a row. The trend is towards Cable strength as positioning is above its 12 week average and the percentile indicator is above 50.

CHF: CHF net speculative positioning improved slightly for the third week in a row following the large increase in net shorts 4 weeks ago. Recently, speculators have sold CHF in droves and bought back shorts slowly, suggesting that the larger trend is towards CHF weakness (USDCHF strength).

JPY: Net short positions increased last week for the 4th week in a row as speculators have returned to selling JPY. The percentile indicator is below 50, indicating that the JPY may continues to weaken.

CAD: CAD positioning continues to improve and traders will flip to the long side in the next week or two, which is CAD bullish. Positioning remains above the 12 week average, which is also CAD bullish.

AUD: Net long positions slipped slightly, suggesting that the Aussie run may be near an end. With longs still near record levels, the risk of a reversal is high.