Swiss Franc Record Short Positions- Suggests USD/CHF Top

[B]US Dollar Index:[/B] Implied net positioning increased significantly last week, from -18,691 to -1,351. Positioning remains above the 12 week average and the percentile indicator is sloping upward and above 50… The outlook is for USD strength as psychology is shifting from bearish to bullish.

[B]EUR:[/B] Speculators continue to sell euros. Net positioning fell from 50,638 to 46,341 last week and the percentile indicator is below 50. The last 2 drops below 50 were false signals (October 2006 and February 2007) but the previous drop below 50, in April of 2005, led to a big decline.

[B]GBP:[/B] British pound longs rebounded significantly last week to regain the 12 week average. Speculators have sold British Pounds since early January but the price has traded more or less sideways since then. As such, last week?s increase in longs may signal the beginning of a bull run that takes Cable above 2.0131.

[B]CHF:[/B] CHF short positions are near historically extreme levels, suggesting that the CHF may be near a bottom (USDCHF top). The percentile indicator is trying to turn up from below 10, which is also bullish. A top may be in place at 1.2476 in the USDCHF.

[B]JPY:[/B] Short positions are in the extreme range that has historically created tops in the USDJPY. Additional JPY losses (USDJPY gains) are possible but the psychological backdrop (extreme pessimism towards Yen) favors a turn and sizeable decline in the USDJPY, especially since the percentile indicator is stalling near the oversold level. Watch the 125.00 figure closely.

[B]CAD:[/B] We wrote last week that “net long positions remain extreme, increasing the odds of a turn in the CAD.” The USDCAD has turned higher. Continued USDCAD strength is favored.

[B]AUD:[/B] With speculative longs falling last week, from 73,374 to 65,213, the Aussie may be due for a correction of recent strength. Positioning is also below the 12 week average now.