EUR Non-Commercial Spec Positions Surge To Multi-Year High As USD And JPY Prepare To Take Out Lows

Tyler Durden's picture

Commodity speculators may or may not be the vile criminals the president and his new working group are making them out to be, but they sure have made their view clear on where they think the USD and the EUR (the JPY not so much) are going. Below is the latest update from the CFTC Commitment of traders report on the three key currencies. While there has been some modest short covering in both the USD and JPY, both continue to trade like the carry funding currencies they are. And with bullish spec positions in the EUR at a multi year highs, the only question is whether the yen or the dollar will be the carry currency of choice in the next beatdown. Of course, how the EUR is expected to retain its lofty perch with all of the PIIGS soon to go under is beyond us, but hopefully it makes sense to Trichet, who is stuck between an inflationary rock and a insolvent peripheral hard place.

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slaughterer's picture

What about that news release on Friday afternoon about the EU creditors not responding well to the haircut plan?  And the dire tone of other announcements about EU bank chaos this weekend?  Are you telling me the Euro is being bid up on this news, or that the news itself was fake or a red herring?

ivana's picture

wait a while. creditors are fighting for first rows for greek assets expropriation. it probably takes some time until vultures agree who is stronger
In meantime, WS masters have more time for shearing sheeps in the greatest trading pair EURUSD

topcallingtroll's picture

How can eur/usd be a great pair trade if you think the euro will depreciate? You are being inconsistent unless i missed something.

ivana's picture

sorry for my english. Was thinking that EURUSD as pair with greatest volume in currency trade

Orly's picture

Besides, sometimes the greatest trade pairs are shorts.  A great trade doesn't necessarily mean higher.


FunkyMonkeyBoy's picture

Well, when the markets were rational and could still be considered 'markets', this would be bearish for the EUR.

But, we are now in a new normal. Market's are no longer price discovery mechanisms, they are tools for the fascist controllers.

topcallingtroll's picture

The pending restructuring and massive haircuts and subsequent forced cuts in social services is deflationary and supportive of the euro.

Gold 36000's picture

How is your ZSL doing, troll?  What was it you said? LOL Be right and sit tight.  Be wrong and take the schlong?

topcallingtroll's picture


The schlong is out of the pants and heading toward me, but i aint been fooked yet.

Still holding on with a 13.69 basis.

I had a couple of bad trades in december and january, but i got my mojo back. This schlong will never come near me.

hardcleareye's picture

uggghhhh  that's a mental image I didn't need........

jeff montanye's picture

speaking of zsl, have you noticed the huge, huge volume jumps in the last week or so?

ZeroPower's picture

Right across the board, AGQ, SLV, and SIVR

ivana's picture

I do not thnk so. PIIGS economies are dead and govs will receive new loans (after restructuring) which will than be distributed for consumption.

Of course, that will just be another bs case of "stimulating economy trough public spending"

topcallingtroll's picture

I hope you are right.

We need more ugly girls in this currency beauty contest so that the dollar still looks good by comparison.

sabra1's picture

would janet napolitano do?

Gold 36000's picture

she is too ugly and no one would accept her in exchange for goods lol.

jeff montanye's picture

that's mean.  she is an excellent conversationalist.

Orly's picture

If I may interject an idea...

All of these machinations in QE have been done to prop up the Great British Pound Sterling, which essentially failed when the crisis unfolded.  Watch that pair and it is the key to all of the other ones, including the EURUSD and the AUDUSD.

When they decide to let the GBPUSD settle, the other pairs will settle as well, at a much lower level than they are sitting right now.  That having been said, it is certainly unclear how long they will keep propping up the Cable.

Right now, all three pairs are bouncing against long-term Fibonacci retracement levels and they are having trouble breaking through, with the exception of the AUDUSD.  If the AUDUSD breaks through the 1.10 Fibonacci level, it is possible that it could breach 1.1522, which is a 150% long-term Fibo-level.  It is hard to imagine that this would be possible but Japan has just opened the flood-gates to new money and the Ozzie carry can get a major boost from that.

It is also possible that the AUDUSD specs can also carry the EURUSD and the GBPUSD higher with it as a simple "risk-on" trade.  Or, the AUDUSD could rocket while the Euro and the Cable churn at these levels (which is what I think is most likely...).  Once the Cable goes, though, that is the signal to short the Euro and the Ozzie dollar against the greenback.

Meanwhile, the USDCAD and the USDCHF have made long-term bullsih Gartley patterns on the daily and weekly charts.  It seems that They are trying very hard to eliminate all technical trading but I don't see how it is possible for very long.

I appreciate your input.  We need more opinionated 4X traders around here!

Thanks to the troll, as well.  Anybody seen Ro?  It's getting lonely around here!


ISEEIT's picture

I'm looking at EUR/CHF. Short. I'll be watching the Asian market tomorrow at open. If the pair moves down in the first hour I expect about a sixty pip move down on the session. Lots of room. The other one to watch for me is AUD/USD. I am a bit leary of cable cause I see the next resistance only about 30 pips away, I'll let others mess with that.

Orly's picture

I've had my (ample..) ass handed to me lately by the AUDUSD pair.  Watch 1.10.  That's the level.  A significant break above that and it moves five more cents easily.

The Double-line indicator on the EURCHF weekly says it's on the rise, while the daily shows a possible move lower to its lower Bollinger Band @~ 1.273.  I am leery of that one, as it appears to be forming a long-term consolidation pattern at these levels.  Nothing very clear at all.

Best of luck, though!  I hope it works out for you!

ISEEIT's picture

Sounds like a technicians take. Not saying you would be wrong but we don't live in normal times and I suspect therefore that sentiment/fundamentals run the show, with tech as a referee. I get the hypocrisy when I mention resistance for cable, its just two dead guys fighting it out though and that is an uncomfortable match to me. I'm an amateur and don't claim to be an authority in the least....But how did you get your ass handed to you with AUD? Staying out? I stayed out and wish like hell I had not. What a freakin' run.

Technicals aside, I see EUR having a bad week and my take is that it will get hurt worst in the CHF pair.

Orly's picture

First, the quadruple top was blasted through at ~1.02, even though it was apparent that the US was going to stop QE.  I was short there.  Somehow, the Ozzie kept on rolling, even though the "risk-on" trade was clearly going to take a bath.  It didn't seem to faze the market in the least that the US was going to stop spending billions daily to prop up the markets.

Didn't make any sense whatsoever because the Chinese are going to have to tighten monetary policy, meaning there will be a slowdown in their economy.  No commodities for you, Mr. Wang.  A slowdown in the commodities trade directly affects the Australian economy, for the worse.  Fundamentally speaking, as you say, those two things alone should have been the death-knell for this run.

Then, it blew right through a Fibonacci level at 1.06 and didn't even budge backward.  I was short there, too.  Sentiment, in that case, should have been on the side of some sort of correction, no matter how small.  That didn't happen, either.

Now, I suppose that traders have their eyes on the nice round number of 1.10, which is really absurd, if you think about it.  Then, as Tyler pointed out, the Japanese basically doubled their money supply in a week- just last week, in their own version of QE.  The pair stalled at 1.06, as it should have, but then resumed the trade upward on this news of free Japanese money moving into the carry trade.

But with the new money and new life to the carry, you can expect that the pair will reach the next Fibonacci level in short order, as it is a blow-off top mode.  Looking at the chart, one can see that the movement is nearly vertical, much as the Naz was in the  Once it hits 1.1522, the next Fibonacci level, which is a 123% retracement from the lows of March of 2002 to the previous high set in July of 2008, then some major, major resistance should be reached.

The 1.522 level, or thereabouts, should mark the long-term high of the AUDUSD pair for quite a while, if not all-time.  These next few weeks are going to be interesting and I will be curious to see whether the pair rockets to that level or simply grinds higher in the face of a deteriorating global economy.  It will definitely be there by mid- to late September.

This week, look to see if 1.10 is breached with any authority.  If so, the next stop will be the all-time highs.  Then, short the hell out of it because it really belongs at about eighty cents.  Commodity bubbles don't last and the Japanese simply cannot pump as much money into it as the Fed has.  The 1.15-level will also signal a top in gold, silver and every other precious and base metal trading.

Or not.


piceridu's picture

Hi Orly,

Just as Chinese entities secretly accumulated gold tonnage without affecting market prices and flipped it back to the PBoC, don't you think that could happen in Austrailia too? China will divest of USD and secretly accumulate every resource Austrailia has to offer and bank it (warehouses). Could this be an explanation as to why AUDUSD seems unaffected? China will still be a buyer no matter what happens as they divest over 2T worth of USD.

Orly's picture

Sure.  That sounds possible if unlikely.  There is still such a thing as nationalism and I imagine it is burning brightly in Australia.

I remember when the Japanese bought 30 Rock.  The entire world was going to go down in flames.  Anyone without round eyes was looked upon with great disdain and many jokes were made about Japanese tourists with fourteen cameras around their necks.

If it were to happen, the Australian government would have to look the other way was Billiton and Tinto have new owners in Beijing.  I would think that it would be difficult to pull off without a serious backlash from the Australian public.

But if you mean that the Chinese wouldn't buy the companies but just the resources they produce, that would be very interesting, indeed.  It has long been my contention that all of this banking nonsense was really about economic warfare of the West against the Chinese.  What better way than having them divest of US dollars, thus basically liquidating their US loan portfolio, while buying commodities at the top?

Once they've divested....ooops!  Imagine that!  Markets do go down after all.  In fact, they go down quite a bit.  Sorry, Hu.  Seems like your country has made some seriously unwise trading decisions.  Better luck next time.

You do make an interesting point, though, with food for thought.

Thanks for that.

ivana's picture

Some fibo relationships point to 1.14 on AUDUSD

Orly's picture

Yes, they do.  Actually, I misspoke in the post above.  (Looking at the wrong chart...).  The 123% retrace is for the 1.10 level.  The 150% retracement level is about 1.15.

Of course, Fibonacci levels are subjective in the most steady of times but when the trade is all over the place, the best we can do is try to find a range.  1.14 easily fits into that range.

I have drawn my lines from ~ July 2008 to ~ December of 2009, taking out the extremes and drawing from the basing pattern in those areas.


falak pema's picture

do you make any money out of this monkey play?

longorshort's picture

Orly what is your email?  Do you do just day trades in FX or swing trade?

Orly's picture

Sorry.  My privet is private...

But, my style is to find extremes and play the retraces.  Usually on longer time frames, such as the Daily, Weekly or eight-hour.  I don't know if that means "swing trading" or not.  Sometimes, I like to scalp for kicks, though not often.

It has been a very rough go of late, as the markets seems to miraculously pull something out of their pockets in the form of some announcement or other.  The latest is that the Japanese have doubled their monetary base in a week!  I just can't compete with such stuff.  Basically, I am a technical trader and use fundamentals as a booster.

I tell my picks here and you should take them for what their worth: not a lot.  I do have technical reasons for saying these things and I will tell you those, as well.  I have no reason to keep secrets, as I firmly believe that there is more than enough for everybody.  I usually like to drop picks on Bruce Krasting's page, so look for me there.

I have been ridiculed before and I'll be ridiculed again, so I am not afraid to be wrong.  You'll just have to read my ideas and see if that comports to your ideas and trading style.  I am not ashamed, though lately I have been wrong...or waiting.

Having said that, there are two trades that are just dying to be made and have been for over two weeks (hence the waiting...).  There is a bullish Gartley formation on the USDCAD daily and a bullish Gartley formation on the USDCHF weekly.  They have been trying their best to buck it down but the formations are so long-term and so strong, I don't think they can.

The USDCAD target is 1.01 from 0.945.  That's quite a move.


P.S.  The upside target for USDCHF is 1.0336.  Another big move.

morkov's picture

"markets" are NOT "economies"...the "mechanisms" are not adequate

disabledvet's picture

"Goldfinger.  He's the man THE MAN WITH THE MIDAS TOUCH!"

slaughterer's picture

But it looked like the haircuts would be impossible to make on Friday. 

uhb's picture

The simple reason is that the EUR is 15-20 years behind the $ in the deadly debt spiral.

The $ will bust way before the EUR... but both fiat currencies will not prevail.

topcallingtroll's picture

As tyler mentioned the banking problem in eurotown is ten times worse than in the usa.

Why would the dollar collapse first?

ZeroPower's picture

How long the currency has existed for is irrelevant. Debt acquired in Liras is equal (comparably) to debt acquired before in DMs and in Pesetas, etc - all of which have pressure on the current euro situation.

razorthin's picture

The REAL criminals will soon attempt to handcuff the "speculators" - you know, tie our feet and hands behind our backs while drowning us in clownbux.  Of course THEY will be free to swim to safety.

disabledvet's picture

i think the old school term is "hold their feet to the fire."  And by "old school" i'm talking Shakespeare here since "they literally held your feet to a fire" when you "the trader" didn't come up with the money you owed.  it appears the "modern day equivalent is currency trading."

Caviar Emptor's picture

Clearly, we need another press conference from Ben. Confidence! 

topcallingtroll's picture

I am praying to bob.that there will be no more press conferences from timmah or ben until i am ready to close out ZSL and go long again.

Bob, can you hear me?

disabledvet's picture

did someone say "another press conference?"

JR's picture

“Commodity speculators may or may not be the vile criminals”…but how about the criminals who are not speculators but control the markets?

A Stalinesque financial price cordon around world commodities that people need to survive - and most heinously around the most basic vital essentials such as food - by Goldman Sachs may soon become known, as was The Ukrainian Famine premeditated by Stalin, as another Holodomor, meaning “death by hunger.”

It’s called the Goldman Sachs Commodity Index (GSCI). It is a derivative that tracks “24 raw materials, from precious metals and energy to coffee, cocoa, cattle, corn, hogs, soy, and wheat. They weighted the investment value of each element, blended and commingled the parts into sums, then reduced what had been a complicated collection of real things into a mathematical formula that could be expressed as a single manifestation.”

In a new “Foreign Policy” article, “How Goldman Sachs Created the Food Crisis,” Frederick Kaufman writes: “Demand and supply certainly matter. But there's another reason why food across the world has become so expensive: Wall Street greed…

“For the roughly 2-billion people across the world who spend more than 50 percent of their income on food, the effects have been staggering: 250 million people joined the ranks of the hungry in 2008, bringing the total of the world's ‘food insecure’ to a peak of 1 billion -- a number never seen before," says Kaufman.

It has been a long, steep slide from the words of Adam Smith to the words of Leon Trotsky: “Where the sole employer is the State, opposition means death by slow starvation. The old principle: who does not work shall not eat, has been replaced with a new one: who does not obey shall not eat.”.

From the fruits of a free enterprise supply and demand economy that created mankind’s greatest miracle on earth, we arrive at today’s message from the representative of the would-be world rulers – Goldman Sachs and the Federal Reserve.

From the article (a must read):

”The structure of the GSCI paid no heed to the centuries-old buy-sell/sell-buy patterns. This newfangled derivative product was 'long only,' which meant the product was constructed to buy commodities, and only buy. At the bottom of this 'long-only' strategy lay an intent to transform an investment in commodities (previously the purview of specialists) into something that looked a great deal like an investment in a stock -- the kind of asset class wherein anyone could park their money and let it accrue for decades (along the lines of General Electric or Apple). Once the commodity market had been made to look more like the stock market, bankers could expect new influxes of ready cash. But the long-only strategy possessed a flaw, at least for those of us who eat. The GSCI did not include a mechanism to sell or 'short' a commodity.

"This imbalance undermined the innate structure of the commodities markets, requiring bankers to buy and keep buying -- no matter what the price. Every time the due date of a long-only commodity index futures contract neared, bankers were required to 'roll' their multi-billion dollar backlog of buy orders over into the next futures contract, two or three months down the line. And since the deflationary impact of shorting a position simply wasn't part of the GSCI, professional grain traders could make a killing by anticipating the market fluctuations these 'rolls' would inevitably cause...

“Bankers recognized a good system when they saw it, and dozens of speculative non-physical hedgers followed Goldman's lead and joined the commodities index game, including Barclays, Deutsche Bank, Pimco, JP Morgan Chase, AIG, Bear Stearns, and Lehman Brothers, to name but a few purveyors of commodity index funds. The scene had been set for food inflation that would eventually catch unawares some of the largest milling, processing, and retailing corporations in the United States, and send shockwaves throughout the world.

“The money tells the story. Since the bursting of the tech bubble in 2000, there has been a 50-fold increase in dollars invested in commodity index funds. To put the phenomenon in real terms: In 2003, the commodities futures market still totaled a sleepy $13 billion. But when the global financial crisis sent investors running scared in early 2008, and as dollars, pounds, and euros evaded investor confidence, commodities -- including food -- seemed like the last, best place for hedge, pension, and sovereign wealth funds to park their cash. 'You had people who had no clue what commodities were all about suddenly buying commodities," an analyst from the United States Department of Agriculture told me. In the first 55 days of 2008, speculators poured $55 billion into commodity markets, and by July, $318 billion was roiling the markets. Food inflation has remained steady since.'”

disabledvet's picture

GREAT article.  "they parked their cash in Chicago" but "the farmer ain't gettin' a frikkin' dime."  Disturbance in the force is real estate because "ain't no way that things recovering"  even after TRILLIONS "blown out of DC's keister." BIG!  Start "jammin Catepillers" (per South Park right here no less?  CLEVER?  Or "too smart for their own good"?) until "it's a bulldozer in every driveway" if need be.  And "then arrived the Silver Surfer."

Gold 36000's picture

Just remember a carry trade currency carries a massive synthetic short embedded in it.  When they unwind, they unwind hard.

disabledvet's picture

Blow the Comex SKY PHUCKING HIGH!?!!!!  "When Dinosaurs roamed the phucking earth??!!!!"

unclebigs's picture

It's all 1 Big Sheeple Trade:

1.  Long precious metals

2.  Long foreign currencies vs. usd

3.  Long stocks

4.  Long commodities


Just wait for the inevitable wash-out as the Sheeple get fleeced once again.




topcallingtroll's picture

Have you paid your trolling registration fee?

Seriously trolls are tolerated here, even welcome at times for an alternative view, but 100 bucks per month for adspace doesnt even cover the bills and tyler needs more server space. Damn thing is freezing up too much again.

Highrev's picture

I'm on the other side of that trade too.

(Well, almost - I'm getting there.)


topcallingtroll's picture

So am I.

But I have donated to zero hedge and paid my trolling fee.