Saturday July 15, 2017 - 11:04:05 GMT
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Commitment Of Traders Report for 11 July 2017 Data Register To Test Your Amazing Trader
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 net long positions continued to build early in the past week and likely continued to gradually increase subsequently. The heavy blue line (once a week spots) provide a useful perspective on how fast EURUSD has climbed from about 1.11 to nearly 1.15. Thats almost 4% in a month. 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.
Net GBPUSD positions remain short and steady for the past ten weeks or so. Since the Brexit vote, the GBP has seemingly found a floor and has been gradually recovering. BOE Governor Carney recently has taken a more hawkish monetary policy posture. This unit is more sensitive than many currencies to its economic data, and that is helpful to those of us who rely on active markets. GBPUSD 1.3000 is a floor that bulls would like to see hold. Keep an eye on the EURGBP cross as a barometer of flows in and out of the EUR. These flows often directly impact both units against the USD.
Traditionally USDJPY and the EURUSD have traded in smpathy with one another against the USD. Recently, they have been trading in opposite directions due yo the perpetual recession in which Japan finds itself. The USDJPY pair has always been heavily manipulated by the Bank of Japan. The BOJ usually tries to keep its currency depressed to promote exports. Whenever the USDJPY starts to slide, expect to to see BOJ USDJPY support. This support typically is covert. The USDJPY correlates positively with the yield on the U.S. 10-yr note. USDJPY longs (JPY futures shorts) have been INCREASING. The Bank of Japan is nowhere near tightening its monetary policy.
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