In the reporting period ended on July 1st, the aggregate net USD long was reduced by 89.4K contracts, approximately about one third of the previous total long. With the total USD long down to 174,734 contracts, this is the smallest long position specs have had in the USD since the report of May 8 of this year.

There continues to be hefty euro/SF shorts against a USD long but these positions are being reduced in an orderly fashion. We suspect the strong volatile euro trade since the end of the report on the 31st has resulted in further liquidation of the short.

The other feature in the period has been the revival in the popularity of the so-called commodity currencies. The C$, the NZ$, and the A$ have all been beneficiaries of funds flowing into these markets. The biggest increase is in the A$. This may be in response to rumors the Chinese are going to restart some stimulation of their economy. Among the discussion is a reduced currency valuation to jump start exports, and perhaps subsidies of the exportation of steel.

The long yen short USD position grows as the yen retains it's safe haven status.

US Dollar Index: Speculators are still unbalanced longs in the DI but did reduce their positions. Total net spec long positions decreased from 54.2K to 46.9K. The large spec remains almost a 7 ratio long.

Euro (EUR/USD): There was about a 5% reduction in the very large OI in the euro. Most of the reduction was caused by specs reducing short positions, taking the total net short from 194,930 to 177,722. Large specs remain a 4.5 to 1 ratio short. Spreading, mostly option trade, remains 10.4% of the total market.

British Pound Sterling (GBP/USD): Both spec groups remain small pound net shorts, as they have had for several weeks. The position is not a large bet, so it seems traders lack a strong conviction. The short position is the smallest it has been for a month.

Japanese Yen (JPY/USD): Large and small specs do not agree what is proper positioning in the yen. Large specs are long the yen, and added to that net long in the period by about 7.6K contracts. Small specs are short the yen and made a small reduction in their net short.

Swiss Franc (CHF/USD): With the Swiss National Bank pegging to franc to the euro, it seems the positions more in tandem on the euro and the Sf. Specs have been big net shorts in the SF and reduced their short position by about 8K contracts in the period. Large specs remain a 4.1 short and the small spec is a 2.6 ratio short.

Canadian Dollar (CAD/USD): Specs shifted their position in the loonie this past period. Small specs aggressively flipped their position from a small short in the C$ to a 9.4K long. The large spec increased his net long by covering 14K contracts of his shorts. Spreading or option trade in the C$ has increased to 6.1% of the total OI.

New Zealand Dollar (NZD/USD): Large and small specs continued to add to their longs in the Kiwi. The large spec is now a 4 ratio long and the small spec is a 2.2 long.

Australian Dollar (AUD/USD): The OI in the A$ increased by 17.3K as the specs aggressively bought the A$. The large spec is now approaching a 2 ratio long. The option trade has grown and is now 5.4% of the expanding OI. The total net spec long is almost 42K.