Saturday January 13, 2018 - 12:20:33 GMT
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Commitment Of Traders Report for 9 January 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.Where and how large the stops may be is critical trading intelligence.
EURUSD net long positions continue to shoot well above the old 100K ceiling. This is a very bullish EURUSD development. The heavy blue line (once a week spots) provides a useful perspective on the price action. In the latest week the EURUSD closed late above psychological 1.2200 line.
As the developing alternative reserve currency twin 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 (short JPY). JPY open interest tends to track the USDJPY exchange rate. As we predicted there has been a lot of unwinding of JPY shorts as the JPY has been the funding currency for many longs.
The USDJPY has always been heavily manipulated by the Bank of Japan. The BOJ typically tries to keep the currency depressed to promote exports. Expect to encounter covert BOJ USDJPY support. The USDJPY tends to correlate positively with the yield on the U.S. 10-yr note which appears to be targeting a yield of 2.630%.
Net GBPUSD long positions are starting to build more quickly. The GBPUSD spot line (heavy blue) has been clmbing with EURUSD, and has been supporting GBPUSD longs.
This GBPUSD pair is more sensitive than most to local economic data. This characteristic makes it more attractive to those of us who rely on active markets. We are always keeping a close 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 so should always be watched by active traders.
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