In the CFTC reporting period ending April 21, speculators added to significant positions in the euro, sterling and the Mexican peso. Bulls and bears took more exposure in the euro and sterling, while in the peso net longs dominated.
The gross longs rose 12.2k contracts in the euro to stand at 185.8k contracts.It is the fifth week in the past six that the bulls added to their stockpile. The Bloomberg data suggest this is a record large gross long position, days before the French presidential election. Speculators have pared their long position in only four weeks this year. But to be sure, the shorts have not capitulated. The gross position rose by nearly 15k contracts to 207.4k. This is the largest gross short euro position of the year.
The reporting period ended several hours after UK Prime Minister May called for a snap election, after spending nine months denying it. The traditional focus on the net position fails to recognize the what happened as the net position slipped an inconsequential 6.4k contacts. However, the bulls added 16.4k contracts to lift the gross long position to 48.3k. It is the third increase in four weeks, during which time the gross long position has risen by 50%. The bears sold another 10.1k contracts to raise their gross short position to 147.8k contracts. It was the second weekly increase, and remained near the record set last October near 154k.
The net Mexican peso position swung to the long side for the first time in two years. Some may see in this the unwinding of the so-called Trump trade. Remember too that the central bank changed its intervention tactics. The central bank balance sheet bears risk of the currency swaps not the international reserves. And the central bank has hiked rates, which bolsters its anti-inflation credibility. The shift to the net long position has been more about net long coming into the market than shorts covering, which is also something that the traditional emphasis on net position obscures.
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