We look at the speculative positioning in the futures market as a proxy for short-term trend and momentum participants.  We are interested in gross positioning more than net because it reveals more insight into exposures.  It is also more true to our experience that differentiates buying to go long and buying to cover shorts, for example. 

Gross position adjustments were among the smallest of the year.  There were no significant (10k+ contracts) gross position change.  In fact, only two of the 16 gross currency position we track saw more than a 5k adjustment.  The gross long euro position rose 5.7k contracts to 71.1k.  The gross short Australian dollar position fell by 6.5k contracts, leaving 76k. 

However, there were three clear patterns even from the minor position adjustments.  First, the net short position fell among all the currency futures, but British pound.  Sterling’s net short position rose to 7.5k contracts from -4.5k in the prior reporting period.  It is the third week they have risen after being net long for a week. 

The second clear pattern is the short-covering.  All the gross short currency futures positions were reduced without exception.  The small short-covering in the New Zealand dollar (1700 contracts) was sufficient to switch the net position to the long side even if barely (700 contracts) for the first time since May.

The third pattern is risk reduction.  Thirteen of the 16 gross positions saw a reduction of exposure.  Exceptions included the gross long New Zealand dollar position that we rounded to 0 from a small decline.  The other exceptions were the 5.7k contract increase in the long euro position and the less than 1k contract increase in the Australian dollar. 

These patterns in speculative positioning were also seen in the 10-year Treasury and crude oil futures market.   Position adjustments were small, bias toward short-covering and risk reduction.