Saturday September 23, 2017 - 11:32:06 GMT
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Commitment Of Traders Report for 19 September 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 in a roughly steady 80-100K contracts range. The heavy blue line (once a week spots) provides a useful perspective. It has been rougly stable recently in a 1.18 to 1.20 band. The EURUSD is looking suspiciously capped at 1.2000.
As the alternatine reserve currency to the USD, keep in mind EUR positions are not just against the USD. EUR crosses vs. the JPY and GBP are critical. The European economy continues to improve and that should remain a EUR positive.
The market remains long USDJPY despite the recent USDJPY decline. Curiously, whenever North Korea tensions escalate, they seem to generate JPY demand as Japanese investors repatriate funds back home on a flight to safety. Given Japan's proximity to the Korean Peninsula, one might have expected funds to flow in the opposite direction.
The USDJPY pair tends to been heavily manipulated by the Bank of Japan. It typically tries to keep the currency depressed to promote exports. Whenever the USDJPY starts to slide, expect to encounter covert BOJ USDJPY support. The USDJPY often correlates positively with the yield on the U.S. 10-yr note.
Net GBPUSD positions remain shoert despite hawkish Bank of England policy statement a week ago last Thursday. Since then U.K. economic data generally have been constructive. The GBPUSD spot line (heavy blue) reflects an improving outlook for the U.K. economy. A highly touted Brexit speech in Florence Friday was a disappointment to GBP bulls.
This unit is more sensitive than most to its economic data. This characteristic makes it more attractive to those of us who rely on active markets. 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.
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