Saturday February 10, 2018 - 15:20:12 GMT
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Commitment Of Traders Report for 6 February 2018 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 continued to hold well above the old 100K ceiling as of Tuesday's close. Odds are they will have been trimemed only modestly since then. We will see in a week.The heavy blue line (once a week spots) provides a useful perspective on the support (or lack thereof coming from the price action.
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 remained heavy long USDJPY (short JPY) as of last Tuesday. JPY open interest usually tracks the USDJPY exchange rate, but has not in the past several weeks. Keep in mind that the JPY plays a special role as the financing currency for many long equity positions. Thus the JPY is definitely being bought as equity longs are unwond.
Net GBPUSD long positions topped two Tuesdays ago. COT data were collected before the Bank of England tightening signal last Thursday and the volatility which ensued afterwards.
This GBPUSD pair is more sensitive than many to its domestic economic data. This characteristic makes it attractive to those of us who rely on active markets. We are also 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 it should always be watched by active traders.
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