Saturday June 10, 2017 - 11:00:44 GMT
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Commitment Of Traders Report for 6 June 2017 Data
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Forex trading is all about stops. The Commitment of Traders Report (COT) is an imperfect, but useful, "sampling" of market positioning. I would prefer more frequent and precise readings, but we have to live with what we get. The data work for the purpose of getting an idea if traders are positioned long or short and if they in big or small.
EURUSD trmain decisively long. In the latest week, upside EURUSD momentum has started to slow as the pair atruggled to establish itself above the psychological 1.1200. By Friday's close it was just below the now neutral 1.1200 line. As a reserve currency, keep in mind EUR positions are not just against the USD. EUR crosses vs. the JPY and GBP are critical. The European economy is improving and that should remain a EUR positive for now.
After the U.K. election shoccker, the GBP remains in play. A weak government will keep the GBP vulnerable to periodic bouts of weakness. The unit also tends to be is highly sensitive to U.K. economic data, and that can be helpful to those of us who rely on active markets. U.K. data tend to be released in the mid-month period. As for the Commitment of Traders data, markets had been maintaining large GBPUSD shorts and have been steadily winding them down. GBPUSD 1.3000 remains a key psychological benchmark. It is the demarkation line between strength or weakness. Keep an eye on the EURGBP cross as a barometer of flows in and out of the EUR. These flows often directly impact EURUSD.
The USDJPY pair is heavily manipulated by the Bank of Japan, which usually tries to keep its currency from gathering too much strength. If the USDJPY starts to slide, don't be surprised to see them support the pair. USDJPY tends to correlate positively with the yield on the U.S. 10-yr note and equity prices. COT positions remain long USDJPY.
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