This indicator tells me the Dollar Index is heading higher
US Dollar Index:
The NYBOT traded contract saw the commercials
reduce their positioning against the dollar as contract remained in the
vicinity of the 90.00 handle. Volume continued to expand during the last weeks
sideways price action, indicating an increased pressure by the dollar bulls,
with the On Balance Volume indicator continuing to signal to an increasing
upside volume that is adding to the positive long term outlook regarding the
Speculative positions reduced their net long
exposure to 8,516 net long contracts, while commercials reduced their net short
position to 9,487 net short contracts, thus adding to the outlook that the next
move to the upside will most likely see the Dollar Index break above 90.00. Open
interest rose by 1,127 to 20,688 contracts outstanding.
Euro speculative positions flipped with 4,792
contracts net long with overall open interest falling by 12,340 contracts from
the previous week to 130,998 contracts outstanding. Commercial traders reduced
their net long positioning remains with 2,693 contracts, which adds to the
outlook that recent euro strength was short lived.
British pound traders increased their short
speculative positions as the pair slid below the psychologically important
1.7500 figure, with speculative traders holding net short 23,045 contracts.
Commercial positioning remained relatively unchanged as large traders kept their
long exposure in the sterling with commercial net longs totaling 23,888
contracts, thus adding to an outlook that banks and other institutions expect
1.7500 handle to be a temporary bottom. However a collapse of the 1.7200 handle
will most likely force commercials to liquidate thus exerting further downward
pressure on the contract. Overall open interest remained virtually unchanged
with 489 contracts being liquidated, thus brining total to 89,400 contracts
Swiss Franc speculative positions remained net
short with traders reducing their net short positions as net shorts fell to
23,045 contracts. Commercials reduced their long exposure to the contract with
overall net long falling to 39,959 contracts, thus adding to a view that the
Swiss Franc is about to break above the 1.3000 handle. Open interest fell by
15,402 contracts to 72,377 contracts outstanding.
Japanese Yen speculative positions remained net
short as the pair tested the offers above the psychologically important 115.00
figure, with 2,736 additional speculative short contracts coming to the market
to total net speculative shorts of 66,035 contracts. Commercials continued to
build their net long positions with 73,157 net long commercial contracts
outstanding as large institutional traders most likely expect the pair to head
above the 115.00 handle. Open interest rose by additional 8,182 contracts to
176,161 contracts outstanding.
Canadian dollar speculative positions remained
net long, with speculators increasing their net long positions with 43,591 net
long contracts in the market. Commercials maintained their net short positions
with 790 net short commercial contracts outstanding as institutional traders
expect the Loonie will most likely break above the 1.2000 handle. Open interest
rose by 969 contracts to 109,147 total contracts outstanding.
Australian dollar speculative positions remained
net long, with speculative traders reducing their long bets by 511,942 contracts
to 16,928 net speculative long contracts as the pair remained in a trading
range. Commercial traders and hedgers reduced their net short exposure to 27,424
net commercial shorts as large institutions most likely expect the pair to
remain range bound. Open interest fell by 9,459 contracts to 60,128 total
contracts outstanding as traders reduced their exposure to the dormant currency.
Sam Shenker is a Technical Currency Analyst for Forex
Capital Markets (FXCM). Sam is the author of the Daily and Weekly Technical
Research reports at FXCM. His reports include: Daily Technicals, Weekly Crosses
and the Weekly Chart Pack. Prior to joining FXCM, Sam spent a number of years on
Wall St trading equities, equity derivatives and futures. He also specialized in
research and analysis of high yield bonds, corporate bankruptcies,
restructurings, reorganizations and venture capital.