Commitments of Traders
USDJPY printed multi - year lows after President Trump announced tariffs last week. With FOMC voter Dudley calling four rate hikes gradual, the dot plot forecast will also be revised upwards. Based on these facts, USD/JPY should appreciate but the rally would be short lived in my opinion. If China starts talking about their own tariffs or expresses less desire to buy U.S. Treasuries (again), USD/JPY will break 105. The downside comes as no surprise to us. My bias remains bearish.
Speculators are clearly not liking GBP futures these days! They covered 6.2K longs this week. This is 4th consecutive week when smart money is dumping long GBP. During this time they covered 37K of their longs, which account for 40% of all longs they held four weeks ago.They were 7.8K net long. This is the least bullish they have been since early December last year. Its a 3 months low! I wonder are they gearing up for something? BOE is fairly bullish on the economy, so the only thing comes in mind: Brexit disaster looming? 1.36 is likely
I have been expecting a top in this market for few weeks now. Double top + an engulfing candle could finally mark this top. This week speculators covered 20.5K longs and 7K shorts. This is very bearish sentiment from this group. Keep in mind that speculators covered 40K longs in the space of 3 weeks. It accounts for over 12 % of their total long positions.
Cable also topped – as expected. The pair formed an engulfing candle on daily and weekly charts, which is always a reliable bearish signal. The decline in GBPUSD is rather surprising considering that the BOE was very hawkish. In their Quarterly Inflation Report, the central bank upgraded their 2018 and 2019 GDP forecasts and said rates may need to rise earlier and faster than what they had seen in November. Despite that, Cable’s rally to 1.40 didn’t last and the pair closed the week at 1.3830
Speculators showed a strong Yen bullish bias last week. They added whooping 10.5K fresh longs and only 2.3K new shorts. They were 114K net short, down significantly from 122K in the previous week. They are still holding a large portion of the total open interest 62.5%, although it was down from the extreme levels of 66% - 70% was saw in the last few weeks. It suggests there are still plenty positions to be un-winded and the potential to the downside is still large.
Speculators covered only 900 longs ( small adjustment ) and added fresh 2.6K shorts to their portfolios this week. They were 122K net short, up from being 119K in the previous week. They still hold a very large % of the open interest in shorts ( 66.4%). This has been at around this level for over 6 weeks and it indicates that there will be a lot of positions still to unwind, which in turn could send the price of USDJPY down to 99.00.Overall all COT metrics indicate more downside in this market.
Speculators added 2.8K new longs and 2.7K new shorts so nothing really changed in terms of metrics. They were 17.5K net long, unchanged from the previous week. Net speculative positions crossed the 33 weeks moving average to the downside, which is an indication of the SHORT CAD outlook ( long USDCAD ). It suggests higher prices in USDCAD. I will be looking for the price to close above 20 days moving average and I will consider buying it.
There was no much adjustments in Yen futures this week. Speculators covered 2.2K longs and added 1.5K shorts. They were 125K net short, up from 121K in the previous week. This is very over-extended level at which speculators have been in the last few weeks.
This week speculators added whooping 28K new longs. This is after they added 10.5K in the previous week. At the same time they covered 8K shorts. This is very extreme behaviour indeed. They were 127K net long, which is al time high but the share of open interest still remained at around 43%. Overall, despite still low share of Open Interest, the picture painted in EUR futures is fairly bearish. All time high net positions, open interest and the technical resistance might suggest a major reversal in this market.
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