By CountingPips.com
The U.S. dollar ended a very busy news week mixed against the other major currencies, according to currency data from Oanda. The U.S. currency made clear gains versus the British pound and Japanese yen while showing very slight gains against the euro, Swiss franc and the New Zealand dollar in the week that ended March 5th. The dollar, meanwhile, fell against the Canadian dollar and Australian dollar for the week.
The largest gain for the dollar this week was against the Japanese yen with a 128 pip increase followed by the 98 pip advance versus the British pound (see chart). The dollar declined by over 229 pips against the Canadian dollar while declining by 122 pips to the Australian dollar.
The GBP/USD fell for the third straight week and for the sixth out of the last seven weeks. Since February 14th to March 5th, the GBP/USD has decreased from 1.5701 to 1.5137 for a loss of 564 pips in the last three weeks.
Futures Bets vs Euro pullback from record highs, Pound shorts rise
Futures bets against the euro decreased from their record high levels as of March 2nd, according to the Commitments of Traders (COT) data released on Friday 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 66,770 contracts after being net short the euro by 71,623 contracts the week before. The net short euro positions had increased for six consecutive weeks before this week’s pullback and have coincided with the euro’s sharp decline against the dollar that brought the EUR/USD to a ten-month low on March 2nd.
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 longs expect that currency to rise versus the dollar.
Other major currencies net short in the CME futures market against the dollar this week were the British pound and Swiss franc while the Japanese yen, Australian dollar, Canadian dollar, and New Zealand dollar all had a net long amount of contracts. The British Pound Sterling net shorts increased for the sixth week in a row with net shorts rising to -67,549 after a total of -62,884 last week. The Swiss franc net short positions registered -6,310 contracts after -8,819 net shorts last week.
The Japanese yen had net long positions of 32,552 contracts, up from 1,717 the week prior. The Australian dollar futures positions were net long by 48,761 contracts after last week totaling net long 38,992 contracts. Canadian dollar long positions were net by 38,289 contracts after 28,421 net longs last week and the New Zealand dollar net longs were 5,112 this week after last week being 6,392 net long contracts.
Busy News Week Roundup:
This week featured many important economic releases and was highlighted by Friday’s U.S. government employment report that showed employment fell by 36,000 workers. The jobs report was better than the forecasts and maintained the flow of optimism that a U.S. economic recovery is underway. Other major releases included the Australian Reserve Bank hiking their interest rate to 4.00 percent as expected while the Bank of England, European Central Bank and the Bank of Canada all held rates steady.
Australia’s retail sales grew by 1.2 percent in January from the month before while Australia’s GDP rose by 0.9 percent in the fourth quarter for a 2.7 percent annual increase.
The Eurozone employment rate leveled at 9.9 percent and beat forecasts predicting the rate to rise to 10.1 percent. Retail sales out of the Eurozone fell by 0.3 percent in January to fall by 1.3 percent on an annual basis. The EU’s GDP grew by 0.1 percent in the fourth quarter to match forecasts and to register a 2.1 percent decrease from the fourth quarter of 2008.
Canada’s GDP grew by 0.6 percent in December and by 5.0 percent on an annualized basis in the fourth quarter of 2009 while Switzerland’s GDP expanded by 0.7 percent in the fourth quarter and marked an annual increase of 0.6 percent.
Other U.S. data showed that service-sector business activity grew by more than expected in February while manufacturing activity fell by more than expected in two different data releases by the Institute for Supply Management. The ADP employment change came in with a 20,000 worker decrease to match forecasts while the governments initial jobless claims data this week fell by 29,000 workers. Pending home sales levels fell for the second month in a row in January by 7.6 percent but were still 8.8 percent above the January 2009 sales level.
Upcoming Events:
Next week’s economic calender highlights include the Swiss unemployment rate, Swiss retail sales, British trade balance, Germany’s consumer price index, Australian employment change, U.S. trade balance, Canada’s employment change and U.S. retail sales. Interest rate decisions are due out of New Zealand on Wednesday and out of Switzerland on Thursday with market forecasts expecting rate holds.
Have a great weekend!
