Hedge funds are piling up on their long bets in EUR and short bets in the AUD, the latest CFTC report shows. In the week ending on July 30th, hedge funds added 10,383 new long contracts, taking the total longs to 60,033 positions. This puts short and long contracts in EUR futures and options head to head with each other; total short contracts in EUR stands at 60,307 contracts, down from 67,388 the previous week.
The increased bullish bets on euro come days before ECB chief, Mario Draghi discouraged speculations that the central bank would take any additional measures to reduce borrowing costs. However Draghi assured that interest rates will be kept low for a long period.
In the meanwhile, shorts in AUD futures and options are on the rise once again. Total shorts in the Aussie are now up to 92,149, after another 12,765 contracts were added over the week. Shorts contracts in AUD held by leveraged funds or hedge funds are touching record highs for the year. Long contracts in AUD currently stand at 44,501 contracts. The increased short interest in Aussie comes as investors anticipate Reserve Bank of Australia will cut interest rates, in its Aug 6 meeting. Traders were seeing an increased likelihood that RBA would cut interest rates to 2.5% from 2.75%.
The AUD has fallen 14% against the USD so far for the year. This performance is even worse than JPY, the favorite currency short of almost every singly hedge fund. With respect to JPY futures and options, hedge funds are holding 84,649 contracts short, down from 93,499 in the previous week. The JPY has slid 12% against USD for the year.
Shorts in British pound also stand high, through July 30th, hedge funds had 67,328 short contracts in GBP futures and options, up from 66,150 the previous week. Total open long contracts in MXN now stand at 52,424 contracts, whereas total short positions stand at 62,791.