Saturday October 7, 2017 - 12:05:18 GMT
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Commitment Of Traders Report for 3 October 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 remain in a roughly steady 80-100K contracts range. The heavy blue line (once a week spots) provides a useful perspective. In the latest week the market decisively traded though the bottom of its prevailing 1.18 to 1.20 band. The EURUSD is looking suspiciously capped at 1.2000. That cap appears to be working lower.
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 a recent USDJPY decline. The North Korea threat is an ever-present issue. Whenever North Korea tensions escalate, JPY demand surfaces 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 have flipped long. BOE Governor Carney recently turned the tone of policy statements to hawkish. U.K. economic data over the past several weeks generally have become more constructive. The GBPUSD spot line (heavy blue) have been reflecting an improving outlook for the U.K. economy.
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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