Commitments of Traders Report – Week 12 ( ending 27th March)

Commitments of Traders Report – Week 12 2016 ( ending 27th March)

The Commitments of Traders (COT) report provides a breakdown of each Tuesday’s open interest for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC.

This is an essential tool for gauging long term sentiment in futures markets.

For most recent reports go to Commitments of Traders

The Commitments of Traders Report is issued by CFTC.
It reports all open positions in futures markets of three main groups of traders:
Commercial Traders - Hedgers
Non-Commercial Traders – Money Managers
Non-Reportable – Retail market
The report breaks down each Tuesday’s Open Interest and gives us a powerful view on what exactly the big guys have been doing in the marketplace and what their plans might be.

It is issued every Friday and includes data from Tuesday to Tuesday. The three days prior to the release date are not included.

In this report we cover EURO, GBP, AUD and we focus on Non-Commercial traders as an indication of profit driven bias.

How to use it.

COT report is not designed as a market entry tool. The market can be short term bullish in a long term downtrend.
COT report is designed to gauge supply and demand of important market participants.
It can be used to confirm mid/long term fundamental bias in a given market.
For example:
Decrease/flat non-commercial long positions on rising prices might suggest the top is imminent. Traders should seek a short setup near the resistance.
Increase in short non-commercial positions on falling prices might support the downtrend.

Highlights

We had a pretty quiet week in the markets. With Easter coming up many exchanges were closed for business on Monday, Thursday and Friday. This low liquidity conditions always favours technical analysis.
Highlights of the week were: GBP – CPI y/y. Inflation in UK came out at 0.3% vs 0.4% expected. This is very bad news for those who count on any interest rates hike this year. At the same time, Retails Sales came out better than expected ( -0.4%). This number isn’t good but its rather less bad.
NZD trade balance printed a massive deviation 339m vs 75m expected. There was no major impact on Kiwi.
And on Friday, Final US GDP was release at 1.4% vs 1% expected. This is a good news for US Dollar, especially, after recent dovish statement from Yellen. There was no liquidity to support the Dollar rally. I expect, markets will react to GDP data next week.
With no news in the calendar, the price tends to response well to technical levels.

EURUSD: Flat
GBPUSD: Flat/Bearish
AUDUSD: Bullish/Flat
USDJPY: Bearish

EURO – Euro Futures

 

This report includes all positions opened after dovish FED’s statement from last week.NC traders, after dropping 13K long contract in the previous week, they held them even this time around. This group now holds, 91.3K long positions. At the same time, NC traders dropped another 10K short positions. This is 3rd consecutive week when NC dumping shorts. They now hold 157K short contracts.
As Non-Commercials covered shorts in Euro futures, there is no sign of buying yet. The long bias cannot be confirmed. I would like to see more long contracts here to support longer term bullishness.

GBP – British Pound Future

It seems like the Cable’s rally run out of steam this week. GBPUSD has been declining all week long since 1.45. It ended the week below 1.4150 after poor CPI. There was nothing fundamental behind higher prices in this market anyway. There is a major support tat the current levels ( 1.4150), if we breach it to the downside, we could see double bottom at 1.3850.
After a massive increased in long contracts last week, Non-Commercial traders backed off and covered 24K longs this week. Seems like traders are getting caught on the wrong side again. We are now to flat to bearish bias on GBP futures. Non-Commercials hold 76.2K short positions, this has been held flat this week and they are bullish at 38.5K contracts.

AUD -Australian Dollar Futures

After covering 24K long positions in the previous week, Non-Commercial traders, added back 6.3K longs. At the same time, they added 1.1K short contracts. This is a bit more stable week in this market. If the sudden drop in longs reported in the previous week was caused by futures being delivered, we must assume; as long as Non-Commercials stay NET LONG, the long bias is still strong in the long term. In the short term, I expect AUDUSD, to print a correction from the current levels. 0.73 levels seem a good area to build up long positions.

JPY -Japanese Yen Futures

 

Again,despite the rollercoster in the markets over the last few weeks, there is no drastic changes in the sentiment in JPY futures. Its seems like long JPY play remains intact. Non-Commercials, after covering 14K longs in the previous week, added back 3.3K. At the same time, they descreased shorts by another 4.4K. This is another consecutive week when this group is covering shorts in JPY futures. This trend seems intact since December 2015.

 

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