By CountingPips.com
The latest Commitments of Traders (COT) data out on Friday showed that futures speculators continued to decrease their bets for the U.S. dollar against the euro for a third week as of July 20th, according to the COT data released by the Chicago Mercantile Exchange. Non-commercial futures positions, those taken by hedge funds and large speculators, were net short the euro against the U.S. dollar by -24,251 contracts after being net short the euro by -27,050 contracts the week before on July 13th.
Euro short positions have now declined for three straight weeks and sentiment has turned around quickly in the past 
few months with euro short positions having come off the all-time low level of -113,890 in May to being now at the best level since January.
The COT report is published every Friday by the Chicago Mercantile Exchange (CME) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are expecting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar.
The British pound sterling was the only other major currency in addition to the euro that was net short in the CME futures market against the dollar as of July 20th while the Australian dollar, New Zealand dollar, Japanese yen, Swiss franc, Canadian dollar and Mexican peso all had a net long amount of contracts against the dollar.
The British pound net shorts decreased for a second straight week to -26,767 short positions from a total of -34,671 that were reported net short on July 13th. The Swiss franc positions turned to net long a couple of weeks ago and edged higher to 15,113 long contracts from 14,590 long contracts and have increased for three straight weeks.
The Japanese yen net long contracts dipped last week to 40,911 from 47,359 net long contracts on July 13th. This interrupts a streak of five straight weeks of increases for the yen but yen positions have risen substantially from being short by -65,612 contracts on May 4th.
The Australian dollar futures positions gained for second straight week and were net long by 32,886 contracts as of July 20th following a net 23,480 long contracts on July 13th. The New Zealand dollar futures positions rose higher for a fifth straight week with 8,973 long contracts this week after a total of 5,452 long contracts as of July 13th.
The Canadian dollar long positions declined to a net 16,424 long contracts after 22,038 net longs the week before while Mexican peso long contracts advanced for a second straight week to 35,886 longs from 28,135 longs the prior week.
COT Data Summary (vs. the US Dollar) as of July 20th, 2010
Euro: -24,251 shorts from -27,050
British pound sterling: -26,767 shorts from -34,671
Australian dollar: 32,886 long contracts from 23,480
Canadian dollar: 16,424 long contracts from 22,038
Japanese yen: 40,911 long contracts from 47,359
Mexican peso: 35,886 long contracts from 28,135
New Zealand dollar: 8,973 long contracts from 5,452
Swiss franc: 15,113 long contracts from 14,590
