Saturday July 22, 2017 - 10:53:04 GMT
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Commitment Of Traders Report for 18 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) provides a useful perspective on how fast EURUSD has climbed from about 1.06 to above 1.16. Thats about 8.5% in three months! Its no wonder why EZ inflation remains subdued and the ECB worries about the economy. 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 seemingly has been forming a floor around the GBPUSD 1.3000 line. 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. EURGBP has been reising steadily and presumably giving the U.K. economy a lift. 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 trade in tandem with one another against the USD. Recently, they have been trading in opposite directions due to the perpetual recession in which Japan finds itself. USDJPY has been about steady since April (wide range), but EURJPY has risen fairly sharply. The 12.5% rise in the EUR vs. the JPY may be a bigger story than the EURUSD gain. 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 as inflation remains depressed.
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