Commitments of Traders

Speculators were rather bullish this week but pushed their net longs to extreme levels. They added large amount of long positions 8.7K and at the same time added 1.5K . They were 98K net long, the highest since 2007! Open interest also remains close to the extreme levels. Speculators held 43% of total Open Interest in longs this week. Despite the extreme levels of net positions, speculators are not highly leveraged in longs yet. The last time ( Oct 2016 ) the price reversed, speculators held almost 60% of the total Open Interest in shorts. It seems like there is still room to add more longs before the price reverses.

Speculators, after becoming net bullish on GBP last week, covered another 14K of their shorts last Tuesday. Despite sharply falling prices, speculators are getting rid of their short positions with a bang. In the last 3 weeks they covered 54K shorts, which accounts for 40% of their all shorts held 3 weeks ago. They were 19K net long, up from 5K in the previous week and being net short two weeks ago. Open interest have been falling sharply in the last 3 weeks. This would suggest that the current decline in GBPUSD is a correction and not a trend reversal.

And finally speculators became net long in GBP Futures. This week they covered 11K shorts and added 3.6K new longs. They were 5K net long. This is the first time since Oct 2015 that speculators are net long in GBP Futures. Given uptrending price action, this is a very bullish signal for the British currency. COT analysis had proven many time before the net short/long switch in sentiment among speculators is a clear beginning of a new price trend. Speculative long positions accounted for 41% of the total Open Interest so there is plenty room for the price top go up until the tipping point of 63% is reached. It time to buy GBP!

EURUSD had a good run up and closed the week at 1.2030 after climbing as high as 1.2090, the highest level since 2014. The move was a combination of weak dollar and ECB’s move towards normalisation of monetary policy. Draghi did not announce any taper yet but suggested the bank is now ready to move towards shrinking the balance sheet. They revised GDP forecast up and got lower on inflation target ( no much ). It was a perfect storm for EURUSD to move up. My bias remains long, although net speculative positions are high and open interest is approaching 500K. Given EURUSD is now trading near the major resistance, some correction is likely

This week speculators added a vast amount of longs ( 9.4K ) and 3.3K new shorts. They were 66K net long, highest level since March 2013! They held 66.3% of the total open interest in longs. This is getting close to the tipping point of 67% when the price collapsed back in march 2017. Open interest was also highest since 2015. It seem like the perfect storm for the reversal is playing out.

Speculators were EUR bullish this week. They added new 7.4KJ long contracts and covered 1.2K shorts. They were 87K net long, up from 79K in the previous week and down from the record high of 93K in the week before that. They held 42% of the total Open Interest in longs.This is still far from the expected extreme at around 59%

Speculators were bullish this week. They added 3.5K new longs and at the same time they covered 15K of their shorts. They were 77K net short, down from 95K last week and 112K two weeks ago. In the last five weeks speculators went from being extremely net short @ 126K to hold only 77K net short positions. This is a huge swing and indicate that speculators are becoming more bullish in JPY futures right after being extremely short. This is supportive of the further downtrend in USDJPY below the 108 support.

Good NFP numbers two weeks ago didn't make a dent in the EURUSD bullish price action. Last friday’s poor CPI and a dismal PPI numbers in the previous day helped to propel EURUSD up. The price had risen from the support at 1.1650 and closed the week at 1.1820. It's hard to see US Dollar positive news these days.Eur, from the other hand shows many signs of recovery so far. My bias remains bullish but I expect some correction down from the current levels first.

AUDUSD closed the week at 0.7910. The pair retraced from the highs and it is slowly trending down towards major support at 0.7730. The speculative net positions are approaching extreme levels and the support at 0.7730 will show if the price will respect it and continue higher or if speculators will tip the scales again and collapse Aussie much lower.