Gonçalo Moreira, CMT
Independent Analyst
In the most recent reporting period, the Commitments of Traders (COT) report, released on Friday the 14th, showed that gross positions adjustments by more than 10k were only seen in the euro and the Japanese yen.
Driven by both increased bullishness and short covering after Draghi's speech last week, the euro speculative longs saw almost 6.2k contracts added to the 103.8k contracts from the previous week, while shorts were cut by 6.7k contracts to 73.7k . The 36.3k gross long euro contracts is the highest since last October when they reached about 72.4k contracts.
Selling of yen, on the other hand, resumed and the net short yen positions went from -79k to -99k contracts hitting a seven week high.
The Swiss franc long positions were also extended from 21.8 to 28k with shorts being sharply reduced 19.6k to 14.1k, having an effect on the net positioning towards multi-week highs at 8.9k.
Net long sterling positions, being the highest net long positioning among small speculators, were cut by 7.6k contracts to 22k among the non-commercials where it is the second most bullish position after the euro. Open interest in this contract is at its highs above 240k.
Among the commodity currencies, the Canadian dollar was reduced to the biggest net short since December 2013: -52k (from 61k) likely driven by the Bank of Canada's unchanged tone at its March monetary policy meeting. The 8.9k difference is still noticeable.
In the Australian dollar, the risk was pared back from both the long and short side with almost no change in the gross positioning. The New Zealand dollar kept adding to its net long at a highest value since May last year more long contracts being added.
Speculators kept their exposure to the U.S. dollar during the week of March 11 in the net short territory with no big variance from the previous period. The aggregate long contracts continue to accelerate at the same pace as shorts and open interest almost reaches the 60 mark after bottoming at 40k in December.
Click here to import this COT study to your My Studies.
What does it mean for traders? Last week's message prevails: “Positioning in the euro and Sterling favors an advance in the EUR/GBP cross, and a positive development of the potential double bottom reversal pattern which has been on the built for two months, to be confirmed with a firm break of 0.8350.†The difference being that the pattern is now confirmed with the recent surge above its neckline (0.8350).
When taken the USD out of equation, the EURCAD is one of the pairs with more extreme positioning, a situation reflected in the price charts at multi-year highs. A significant change in one of the two contracts can give trading opportunities other then trend following breakouts.
About Commitments of Traders
The weekly Commitment of Traders report summarizes the total trader positions for open contracts in the futures trading markets. The CFTC categorizes trader positions according to commercial hedgers, non-commercials (also called speculators) and nonreportable traders (usually small traders/speculators). The report is published every Friday and shows futures positions data that was reported as of the previous Tuesday.
Driven by both increased bullishness and short covering after Draghi's speech last week, the euro speculative longs saw almost 6.2k contracts added to the 103.8k contracts from the previous week, while shorts were cut by 6.7k contracts to 73.7k . The 36.3k gross long euro contracts is the highest since last October when they reached about 72.4k contracts.
Selling of yen, on the other hand, resumed and the net short yen positions went from -79k to -99k contracts hitting a seven week high.
The Swiss franc long positions were also extended from 21.8 to 28k with shorts being sharply reduced 19.6k to 14.1k, having an effect on the net positioning towards multi-week highs at 8.9k.
Net long sterling positions, being the highest net long positioning among small speculators, were cut by 7.6k contracts to 22k among the non-commercials where it is the second most bullish position after the euro. Open interest in this contract is at its highs above 240k.
Among the commodity currencies, the Canadian dollar was reduced to the biggest net short since December 2013: -52k (from 61k) likely driven by the Bank of Canada's unchanged tone at its March monetary policy meeting. The 8.9k difference is still noticeable.
In the Australian dollar, the risk was pared back from both the long and short side with almost no change in the gross positioning. The New Zealand dollar kept adding to its net long at a highest value since May last year more long contracts being added.
Speculators kept their exposure to the U.S. dollar during the week of March 11 in the net short territory with no big variance from the previous period. The aggregate long contracts continue to accelerate at the same pace as shorts and open interest almost reaches the 60 mark after bottoming at 40k in December.
Click here to import this COT study to your My Studies.
What does it mean for traders? Last week's message prevails: “Positioning in the euro and Sterling favors an advance in the EUR/GBP cross, and a positive development of the potential double bottom reversal pattern which has been on the built for two months, to be confirmed with a firm break of 0.8350.†The difference being that the pattern is now confirmed with the recent surge above its neckline (0.8350).
When taken the USD out of equation, the EURCAD is one of the pairs with more extreme positioning, a situation reflected in the price charts at multi-year highs. A significant change in one of the two contracts can give trading opportunities other then trend following breakouts.
About Commitments of Traders
The weekly Commitment of Traders report summarizes the total trader positions for open contracts in the futures trading markets. The CFTC categorizes trader positions according to commercial hedgers, non-commercials (also called speculators) and nonreportable traders (usually small traders/speculators). The report is published every Friday and shows futures positions data that was reported as of the previous Tuesday.
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