Sunday, September 17, 2017

British Pound Soars Amid Dramatic Rebound In Interest Rates



















The most significant move in futures positioning (into September 12th) was with the British pound, as sentiment improved markedly heading into last week's Bank of England (BOE) meeting.  The Monetary Policy Committee provided the markets with the 2nd hawkish surprise by a central bank in as many weeks, helping thrust Sterling to post-Brexit highs and interest rates (globally) to recover off 2017 lows. The latest Commitment of Traders (COT) report also highlighted the continued unwind of the yen carry-trade, prior to last week's reversal in the "risk-on" trade, which has seemingly caught traders off-guard.  Meanwhile,  US equities continue to chug along, as the major averages collectively trade at or near all-time highs as next week's focus shifts to the Federal Reserve.


The British pound soared to fresh post-Brexit highs after the BOE unexpectedly hinted at an imminent rate hike. UK bond yields and the sterling both soared as the market was clearly caught off-guard. According to the most recent COT report, large speculators were increasing their long exposure heading into meeting, adding the most amount of (gross long) contracts since April. Meanwhile, retail FX traders continued to fight Sterling strength all week long, as retail FX optimism sunk to near the lowest level for the year. That said, both times retail sentiment reached these levels (this year), the pound had begun to top-out. Large speculators, however, seemingly under-own sterling and are clearly increasing their exposure to the British currency. This hints of a re-test of the 1.3831/1.3948 region either immediately or once overbought headwinds are unwound a bit. Look for the 1.35 psychological region to cushion dips to the downside.

The EUR/USD has pushed through the psychological 1.20 mark twice, but has failed to close above it. This puts the single currency in peculiar spot, where the trend is clearly higher, but the ascent looks a bit exhausted. The 10-month improvement in euro positioning has stalled as of late, but remains near the largest net long position by (non-commercial) speculators on record. Meanwhile, according to recent retail FX traders positioning data, the retail population looks to be increasing their euro exposure. This is probably due to negative market psychology towards the US dollar that is feeding into the minds of retail traders, who are notoriously late when it comes to moves in the market. If the 1.1840 region remains supportive, the next key (upside) objective is 1.2138 or the mid point of the overall range since 2014. If euro strength, however, were to stall anywhere ahead of the 1.2070 area (to the upside), then it could set the stage for a broader correction.

 Large (non-commercial) speculator's have been paring back bearish bets against the yen or the so-called "carry trade", as the percentage of long positions improved for the 7th straight week. Although the net increase was a mere percent, it continues to highlight the short-covering of the yen carry trade that had just recently reached a 2-year high. Since September 8th, however, the USD/JPY has squeezed higher, seemingly catching the market off-guard by correcting back to midpoint of the recent range just below 111 (USD/JPY). Interest rates around the world have also followed suit, as many traders and investors got lulled into thinking that rates and the (US) dollar would remain low for sometime.  In the span of two weeks, we've seen the Bank of Canada surprise markets with a rate hike and the Bank of England surprisingly prepare markets for a rate hike, and this week the spotlight is on the Federal Reserve. If the retail population continues to sell the dollar vs the yen as they did last week, then a sustained push through the 110.82 (USD/JPY's range midpoint) could materialize towards 111.70 then 112.88. A dovish Fed, however, could quickly re-open the 107.29 (September 8th).

Bullish sentiment by Australian dollar (large) speculators has stalled ever since net longs reached 78% nearly 2-months ago. The recent move (up) through the July high at .8066 was brief and spent most of last week consolidating. Technically, the Aussie is at a cross-road, where the latest trend (up) looks to be losing steam, but subsequent dips seem to find its footing at a relatively high level. Typically, in these situations, the "trend (up) is your friend", but  an inability to clear .8066 (to the upside)  could re-enforce bearish divergences seen on both daily and weekly charts. This would also relieve some of the extreme (long) positioning in the Aussie by (non-commercial) speculators and increase the odds for a sustainable move through the recent high at .8125 towards .8455. That said, a clean loss of .7835 (to the downside) would suggest a much more meaningful decline.

Canadian dollar bullish sentiment by large speculators has steadied since early August after having seen both the net long tally and net long percentage advance the prior 3 months. Meanwhile, after reaching a fresh 2-year low the prior week, the USD/CAD spent all last week in a tight range near the 1.22 handle. The most recent retail FX data indicates that the retail trading population is starting to follow Loonie strength, which is typically a bearish development.  Also, with weekly RSI diverging, further Canadian currency strength could be rather limited until the rather crowded net long position by futures speculators can unwind a bit more. That said, the technical breakdown in the USD/CAD looms large and could extend lower if the Federal Reserve disappoints next week and broad dollar weakness re-emerges.

Gold futures sentiment waned according the latest COT report, as net long positions by percentage ticked down for the first time in over 2 months. More importantly, Gold futures managed to erase all of it's monthly gains just last week, as retail traders have seemingly returned to buying the yellow metal. While, this could temporarily guide gold futures lower, so far the latest move down looks to be of the corrective type. Gold bulls should remain in control while the 1300 handle remains supportive to the downside . That said, last week's price-action serves as a reminder of how overbought price-action is on both daily & weekly charts. If, Gold futures resume strength early on next week, however, this latest correction could represent a mere pause within the latest broad up-trend that could target 1450, once 1375 is fully cleared to the upside.

Crude oil futures last week probed above the psychological 50 threshold for the first in over a month, highlighting a bullish breakout of a declining trendline that's been in place since February. Positioning by futures traders (into September 12th) stalled in terms of net long positions and percentage, as (gross) long positions dipped slightly. While, the technical outlook has remained confined to a well-established range between 45 & 50, a sustained push beyond 50.46 (July 31st high) would shift expectations (higher) towards 52 then 54. That said, losing 49 to the downside could usher-in further ranging and expose the 45 handle again.

E-mini S&P 500 futures reached another all-time high last week. Speculative sentiment (into September 12th) edged higher as E-mini S&P 500 speculators added gross longs quite substantially. The net long percentage, however, has pulled back from fresh multi-year highs to suggest that large speculators are cautious, but remain relative optimistic going forward. It will be interesting from a longer-term perspective, how price-action reacts at the psychological 2500 level, considering potential bearish weekly divergence. That said, last week's price-action was especially promising, as the previous peak in August reverted as support once broken. It does seem, however, that equity markets need some sort of news event to launch price-action into a new range, and that event could be the FOMC. If, the Federal Reserve turns out to be a disappointment (for equity markets), then critical 100-day moving average support could quickly be re-tested (to the downside).

Nasdaq 100 futures speculators mildly increased gross longs in the latest COT report. This allowed for the net long percentage to inch up to 64% heading into the close of last Tuesday's trade.  Subsequent price-action suggests that technical headwinds such as weekly (chart) divergences could potentially limit further strength. Moreover, the lethargic mood exhibited by non-commercial traders, hinting that Nasdaq 100 futures could struggle to make headway without some sort of bullish news event that can trigger separation from the August highs. The FOMC this week has the potential to be that catalyst for equity traders. If, the Federal Reserve, however, were to disappoint equities, it would still take a sustained loss (by Nasdaq 100 futures) of the 5800 region to shift the overall trend lower.

US 10-Year futures reversed quite dramatically last week after spent the previous 8-weeks grinding higher. While this move has seemingly caught the market off-guard, the most recent COT data also continued to point out that (large) speculators were not fully participating in the latest move up in price-action. While weekly technical divergences correctly hinted of the broad false-breakout reversal in bond prices, the outcome of next week's FOMC meeting will be the deciding factor whether the recent sell-off continues. A hawkish Fed could quickly re-open the May/July base in the 125 region, and a dovish Fed could see a re-test of the recent yearly high.

US 30-year futures speculators optimism has stalled, according to the latest COT report, as bullish sentiment continued to pull-back off its 2017 high. Gross longs, however, remain near their highest level since 2008, while gross shorts increased by roughly 4K contracts. The latest moves exhibited in sentiment coupled with a hawkish Fed next week could eventually steer US 30-year yields back towards 3.00%.








Monday, September 11, 2017

Dollar Breaks Down As Carry Trade Continues To Unwind


Futures positioning was relatively subdued to start the month of September. Sentiment vs the US dollar was mixed in the last week of the unofficial summer season, but then declined across-the-board after returning from holiday (US Labor Day) weekend, only to finish the week at multi-year lows. The latest Commitment of Traders (COT) report (ending September 5), also featured a record (net) long position in the euro futures contracts, and the continued unwind of the so-called (Japanese) yen "carry-trade."

Meanwhile, central bank rhetoric continued to be a focal point for forex traders. Last week's BOC's (Bank of Canada) unexpected rate hike boosted the Loonie (Canadian dollar) to another 2-year high vs the USD, and the ECB's mum view on recent currency appreciation helped drive the euro to new multi-year highs vs the USD. In other developments, interest rates reached new lows for the year, US equities continue to consolidate near all-time highs, and Gold futures continued to trade higher towards the 2016 peak.



FX futures positioning vs the US dollar in the early portion of the month (of September) was relatively subdued for the 2nd straight week . Data from the latest COT report (ending September 5th) was mixed in the FX space as bearish bets vs the British pound rose again, while the Aussie and Loonie pared-back their rather extreme (net) long positions. Sentiment towards the Japanese yen and euro, meanwhile,  saw modest increases vs the greenback. Speculator's had been paring back bearish bets against the yen or the so-called "carry trade", as the percentage of long positions improved for the 6th straight week. Although the net increase was a mere percent, it continues to highlight the short-covering of the yen carry trade that had recently reached a 2-year high. After the holiday weekend, the USD/JPY gapped lower only to finish the week below 108, the lowest level since Trump was elected president. While price-action remains capped by 108.67 (to the upside), the next downside target is located at 106.50 (key Fibonacci retracement) ahead of the psychological 105 region.

 The EUR/USD pushed through the psychological 1.20 mark again, closing above it for the first time since late 2015. The 10-month improvement in euro positioning, which had seemingly stalled as of late, increased by 3% to highlight the largest net long position by (non-commercial) speculators on record. While price-action and sentiment may be at extremes, their trends remain strong and could be supported by the move seen by retail traders last week, which saw them fight euro strength (according to recent Retail FX data). The next key (upside) objective is 1.2138 or the mid point of the overall range since 2014, ahead of 1.2570 or the corresponding 61.8% (Fibonacci) retracement. If, however, the EUR/USD fails to materially take out the 1.2070 area to the upside, then it could st the stage for a broader correction.

It was similar story for the British pound last week, as retail FX traders jumped-out-the-gate fighting Sterling strength. As for sentiment, large speculators reduced their exposure (to the pound) once again, suggesting that non-commercial traders under-owned the British currency. This hints of a re-test of the August peak at 1.3267 (GBP/USD), which if cleanly broken could expose the psychological 1.35 region. That said, if next week turns out to be bearish (technically), then it could lay the groundwork for a topping pattern vs the USD.

Bullish sentiment by Australian dollar large speculators has stalled as of late, ever since net longs reached 78% over a month ago. Price-action in Australian dollar futures, however, moved briefly above the July high at .8066 before pulling back slightly. Technically, Friday's bearish reversal highlights divergences on both weekly and daily charts, but could be a temporary exhaustion if the Aussie quickly regains its footing early next week. If risk aversion persists, however, an inability to clear .8066 could re-enforce these technical headwinds and extreme (long) positioning in the Aussie.

Canadian dollar bullish sentiment by large speculators has steadied since early August after having seen both the net long tally and net long percentage advance the prior 3 months. Meanwhile, after last week's surprise rate hike by the BOC, the USD/CAD thrusted to a fresh 2-year low, closing under 1.21 on Friday. The most recent retail FX data indicates that the retail trading population is starting to follow Loonie strength, which is typically bearish.  Also, with weekly RSI diverging, further Canadian currency strength could be rather limited until the rather crowded net long position by futures speculators can unwind a bit. That said, the technical breakdown in the USD/CAD looms large and could extend lower while broad dollar weakness persists.

Gold futures sentiment continues to show improvement, as both net positions by total and by percentage ticked up for the 8th straight week. More importantly, Gold futures have continued to build upon the latest monthly chart breakout of a 6-year bear trendline, which has gold bulls poised to re-test the 2016 peak at 1375 in the near-term. After having broken down in mid-August to fresh lows of optimism, retail traders seemingly returned in fighting gold strength, which should temporarily aide Gold bulls as well. That said, Friday's price-action serves as a reminder of how overbought price-action is on both daily & weekly charts. If, Gold futures resume strength early on next week, however, this could represent a mere pause within the latest broad up-trend that could target 1450 once 1375 is fully cleared to the upside.

Crude oil futures gave back almost all of last week's gains on Friday, highlighting another rejection by a declining trendline that's been in place since February. Positioning by futures traders (into September 5th) inched up in terms of net long positions and percentage, as (gross) short positions dipped slightly after having leapt nearly 30% the previous week. The technical outlook remains confined to a well-established range between 45 & 50, and for the very near-term, range-bound conditions should persist unless the aforementioned trendline is broken to the upside.

E-mini S&P 500 futures continue to consolidate just below last months all-time high. Speculative sentiment (into September 5th) pulled back slightly as E-mini S&P 500 speculators covered gross longs quite substantially and covered gross shorts to a lesser extent. The net long percentage pulled back from fresh multi-year highs to suggest that large speculators are reducing exposure but remain relative optimistic going forward. It appears that price-action may be forming a potentially (bullish) continuation pattern. That said, a sustained loss of 100-day moving average support would indicate that a deeper correction is at hand.

Nasdaq 100 futures speculators mildly covered gross longs and reduced gross shorts in the latest COT report. This allowed for the net long percentage to inch up to 63% heading into the close of last Tuesday's trade.  Subsequent price-action suggests that technical headwinds such as weekly (chart) divergences may be potentially weighing. Moreover, the lethargic mood exhibited by non-commercial traders, hints of a struggle without some sort of (bullish) news event that can trigger technical separation from the August highs. That said, it would take a sustained loss (by Nasdaq 100 futures) of the 5800 region and/or 100-day moving average support to shift the overall trend lower.

US 10-Year futures prices have steadily risen, reaching new highs for the year just last week. The most recent COT data indicates, however, that (large) speculators are still not really participating into this latest bout of risk aversion. Net longs fell by over 61K contracts, pulling the overall percentage down to 57% from 59%, despite rising geopolitical tensions that have push (bond) yields to new (2017) lows. Although, the dominating theme of lower US dollar and US bond yields has yet to materially reverse, it is premature to call either a true breakout. In fact weekly technicals hint of basing by both the greenback and interest rates, but, unfortunately its also equally too early to call for a full-fledged recovery given how limited recent reversal have been.

US 30-year futures speculators optimism has stalled, according to the latest COT report, as bullish sentiment continued to pull-back off its 2017 high. Gross longs, however, remain near their highest level since 2008, while gross shorts increased by roughly 12K contracts. While the recent advance in price-action has been steady and choppy on its latest move back to the June peak at 157.80, the follow-through has been limited. The latest moves exhibited in sentiment coupled with a potential technical false-break could eventually steer US 30-year yields back towards 3.00%.
















Tuesday, September 5, 2017

Gold Next Seeks Test Of Critical Resistance

Gold futures have enjoyed follow-through strength after the holiday weekend, continuing August's key breakout.

From a long-term perspective, Gold is trading within the upper portion of a year-long range that looks like it could extend towards 1500. If the July 2016 peak (1375) manages to cap, however, it could raise longer-term red flags for the latest 20-month recovery. This is because 1375 coincides with a 38.2% retracement of the overall prior range, and failure to break above it would suggest that recent strength is merely a corrective counter-move within the 6-year decline from 1900.

So, it is imperative that Gold futures take 1375 to the upside to keep momentum alive for a key equality target located just under the 50% retracement and psychological 1500 threshold.

Monday, September 4, 2017

Dollar Bulls Shows Some Fight; Gold Confirms Monthly Breakout

While it was a dull week for FX futures positioning heading into (August) month-end, it was a much more interesting story in how the US dollar managed to overcome another spike down to fresh (20-month) lows on Monday, and then Friday's disappointing (US) jobs report. After what seemed like such a bleak start to last week, the Dollar Index (DX) actually finished modestly higher, not only highlighting bullish technical divergence (daily RSI), but hinting of a temporary base for the oversold greenback.

The latest Commitment of Traders (COT) report (as of August 29th) also pointed-out the continued gradual unwind of the popular (Japanese) yen carry-trade amid  increased geopolitical tensions and overall nervousness for the US administration's policies. The recent CFTC data also revealed the sudden nervousness and negativity exuded by Crude oil futures traders heading into the last week of the summer's driving season and strangely, ahead of knowing the true disastrous impact from Hurricane Harvey . In other developments, US equity indices  finished near all-time highs; Gold confirmed a monthly (chart) breakout; and the Loonie (Canadian dollar) finished the week at a 2-year high vs the USD.

FX futures positioning against the US dollar was relatively subdued heading into end of August, despite a rather exciting week in price-action. Data from the latest COT report depicted an exhausted short (US) dollar trade that stalled bearish bets with exception with the Japanese yen. Speculator's there have been paring back bearish bets against the yen, as the percentage of long positions improved for the 5th straight week. This enabled the net percentage (of long positions) to edge higher to 28%, highlighting an improvement off the recent 2-year low. More importantly, it highlights the gradual reduction of the so-called carry trade that has continued ever since geopolitical tensions between the US & North Korea have begun to escalate.

Meanwhile, according to recent FX trading data, the retail population continues to remain quite bearish of the yen, with roughly two thirds of retail position short. That said,  after briefly probing below 108.67, the latest oversold bounce does indeed solidify a base with technical significance in the USD/JPY pair. If a move beyond the key 111.00/33 region materializes, it could re-ignite the yen carry trade back towards the 114 handle. If, however, 110.56 (key Fibonacci retracement) continues to cap price-action, then all bets are off!



The EUR/USD edged higher into the period covered by the most recent COT report (8/22 to 8/29), as euro bulls briefly broke above the key 1.20 mark for the first time since late 2015. The 10-month improvement in euro positioning has stalled out, however, and could be subject to pulling-back even further given retail traders have seemingly started buying the single currency as of late. That said, the overall trend up in the EUR/USD remains in tact until key support at the 1.17 handle is compromised to the downside.


British pound (futures) sentiment by large speculators dipped again slightly.  The bump up in gross shorts positions allowed for the the net long percentage to inch down for the third straight week, reaching a net long percentage of 35%. The GBP/USD, meanwhile, managed to advance roughly three-quarters a percent in that period (8/22 to 8/29). The move down in speculative sentiment, however,  is occurring simultaneously while retail optimism towards the Sterling has moved higher. This hints of additional downside for the British pound vs the USD, and suggests that a clean break of 1.2775 to the downside could clear the way for the key 1.26 region (GBP/USD).




Australian dollar sentiment by large speculators vs the greenback has stalled out at 75% (net long) after plateauing at 78% a month ago. According to the latest CFTC data, speculators continue to grow net longs, however, but because of a proportionate move up in gross shorts, the net long percentage remained unchanged for the week. Price-action in Australian dollar futures has continued to hover near the 80 cent threshold and looks technically like its likely consolidating for the next possible re-test of the July high at .8066. Moreover, if retail traders continue to sell into the Aussie as they did the back-half of last week, then the AUD/USD could have the fuel needed to break .8066 .



Canadian dollar bullish sentiment by large speculators has steadied since early August after having seen both the net long tally and net long percentage advance the prior 3 months. After a brief bout of consolidation, the USD/CAD, meanwhile, has retreated to a fresh 2-year low, closing under 1.24 on Friday. The most recent retail data indicates that the retail trading population has resumed fighting Loonie strength once again. While this is a bullish development for CAD bulls, there is unfortunately not much more room until the retail population nears an extreme as seen in mid-August. Also, with weekly RSI diverging, further Canadian currency strength should be rather limited until  the rather crowded net long position by futures speculators can unwind a bit.

Gold futures sentiment continues to show improvement, as both net positions by total and by percentage ticked up for the 7th straight week. More importantly, Gold futures have confirmed a monthly chart breakout of a 6-year bear trendline, which has gold bulls poised to re-test the 2016 peak at 1375 in the near-term. After having broken down in mid-August to fresh lows of optimism, retail traders seemingly returned last week in fighting gold strength. Similar to the Canadian dollar's situation, however, there's limited room until retail positioning reaches an extreme (low). Thus, once gold futures reach significant overhead resistance, a sizeable period of consolidation is likely to ensue, until over-crowded longs unwind a bit at that point.

 Crude oil futures dipped nearly 3% heading into the last week of the summer's driving season. Positioning by futures traders in the same period (8/22-8/29), also reflected the sudden nervousness felt by large speculators. Short positions leapt nearly 30% in just a weeks time, a staggering move in positioning especially that it occurred just before the full impact of Hurricane Harvey was known. Crude prices, however, would go onto stage a rebound once the reality set in as a result of Harvey's devastating floods. While the rebound stabilized recent downward momentum, the technical outlook remains confined to a well-established range between 45 & 50.  At this point, it is clearly too early to tell whether speculative sentiment has shifted lower or whether the latest COT report was a one-off. For the very near-term, range-bound conditions should persist unless an unforeseeable event takes place.


E-mini S&P 500 futures continue to edge higher towards last months all-time high. Speculative sentiment has accelerated higher accordingly. E-mini S&P 500 speculators increased gross longs by 34K and covered gross shorts by nearly 23K. The weekly bump-up in the net long percentage to fresh multi-year highs suggests that large speculators are largely playing into further strength for the S&P 500. That said, the aggressive move in sentiment has not yielded a technical breakout for the S&P 500 (cash or futures) as of yet, and the biggest concern for all equity indices is weekly (chart) divergences once price-action re-tests those highs. So far, of the major cash & futures equity indices tracked globally, only the Nasdaq 100 has achieved a new high.

While technology stocks have been the leaders for some time, they too are faced with weekly technical headwinds. That said, the trend remains up for stocks in general, but the technical reaction over the next few weeks will be critical in determining whether there's an immediate continuation or a more prolonged period of consolidation.

Nasdaq 100 futures speculators mildly added gross longs and left gross shorts unchanged in the latest COT report. This allowed the net long percentage to remain at 62% despite a minor increase in the net long tally.  The subsequent thrust higher in price-action  triggered a fresh all-time high, but is not reflective by the lethargic mood seen in recent speculative sentiment. Moreover, with technical headwinds such as weekly (chart) divergences potentially weighing, it suggests that Nasdaq 100 futures could struggle to make headway unless there's some sort of bullish news event that can trigger some technical separation from the August highs.

 US 10-Year futures continue to grind higher while speculators continue to slowly increase their net long position. According to the most recent CFTC data, speculators covered some (gross) short positions and added some (gross) short positions, allowing for the net long percentage to increase slightly to 59%. This has buoyed US 10-year futures to re-test the key June peak in the mid-127 region as US 10-year yields have re-tested 2.10%. The subsequent reaction seen last week, however, was telling, and could hint of a potential base (in yields) given the weak technical move or slow grind that has unfolded over the past few months. More importantly, last week's (bearish) reaction by futures after testing the June peak could highlight another significant technical rejection that could lay the groundwork for a sustained move (by futures) back towards the May/July base at 124.80.

US 30-year futures speculators optimism stalled, according to the latest COT report, as bullish sentiment managed to pull-back off its 2017 high. Gross longs finally dipped from their highest level since the Financial Crisis in 2008, while gross shorts decreased by roughly 8K. While the recent advance in price-action has been steady and choppy on its latest move back to the June peak at 157.80, the reaction seen last week once re-tested was brief and triggered a brisk (bearish) reversal. The latest moves exhibited in sentiment and in price-action both highlight potential ceilings that could steer US 30-year yields back towards 2.94% then potentially 3.00% and higher.

Sunday, August 20, 2017

Weekly Futures & FX Positioning Report - August 20, 2017


According to the latest COT (Commitment of Traders) report (as of August 15th), the most significant move in the FX futures positioning was once again with the Japanese yen, as the percentage of long (futures) positions of speculators improved for the 3rd straight week. This enabled the net percentage (of long positions) to edge higher to 26%, highlighting an improvement off the recent 2-year low.  The number of gross short positions (vs the yen), fell for the 4th straight week, allowing for the net (position total) to increase by another 18K.  According to retail trader data provided by Oanda Corporation, the retail population continues to fade yen strength, pushing the overall percentage of bulls down to 31%. While this is still near the year's low (in terms of retail optimism for the yen), in both previous occasions that the percentage reached these (low) levels, the yen grinded higher the subsequent few weeks. A solid break below 108.67 would confirm a bearish and would expose the 107.85 (key Fibonacci retracement) to mid-105 region next. That said, if the broad dollar correction were to continue, a substantial base at 108.67 could be highlighted on price-action moving beyond the 111.00 handle (USD/JPY).

The net long tally for euro (futures) speculators inched lower once again after having ticked-up the previous week. Price-action for EUR/USD edged down accordingly during that period (8/8 to 8/15) as euro bulls continue to consolidate recent 18-month highs. The gross long position dropped by over 10k and gross shorts edged up slightly, allowing for the net percentage (63% long) to dip. This potentially highlights a top or ceiling in terms of sentiment for large speculators. According to the latest data from Oanda Corporation, retail traders seem to be undecided with regards to the euro. That said, retail optimism has seemingly bottomed, suggesting that euro could endure a broader correction vs the USD, especially if support at the key 1.17 handle for the EUR/USD is compromised.



British pound sentiment by large speculators dipped slightly, according the latest COT report. Price-action of the GBP/USD suffered a 1% loss in that period, testing 100-day moving average support once again.  The bump up in gross long positions were outpaced by the increase in gross shorts, allowing for the net long percentage to move down to 40% from 41%. According to recent data provided by Oanda Corporation, retail traders optimism towards Sterling has moved higher, as the percentage of longs bumped up to 47% by Friday (8/18). Momentum for both sentiment and the short-term technical outlook hint of additional downside for the British pound. A clean break of the 100-day would expose the key 1.26 region for the GBP/USD.




Australian dollar sentiment by large speculators vs the greenback has stalled out at 73% after plateauing at 78% two weeks ago. According to the latest CFTC data, speculators continue to grow net longs, however, but because both moves in gross long & shorts were miniscule, it was not enough to move the needle. Retail traders (according to recent Oanda data) increased their optimism towards the aussie, as the net long percentage moved up to 46%, putting distance to the (31%) low seen back in July. If, however, last week's 1.39% recovery by the AUD/USD was fueled solely by retail traders, then its likely that the Australian dollar is merely consolidating a larger downward correction. That said, if the 78 cent handle (AUD/USD) were to continue to support, a drive back towards the 81 cent threshold cannot be ruled out.



Canadian dollar (futures) sentiment by large speculators finally reversed a 12-week consecutive streak of increases on both the net long tally and net long percentage. Profit-taking finally ensued according to the CFTC, as gross long positions were trimmed quite substantially (by 12K), while gross shorts held steady at around 35K. The USD/CAD also had continued to enjoy its rebound off the July low, edging up nearly two-thirds a percent during the same period (8/8 to 8/15) of the latest COT report. Unfortunately, that recovery was seemingly short-lived as the Loonie ended up rallying 1.36% subsequently. Retail traders (according to recent data provided by Oanda Corporation), however, have continued to buy the Loonie after having sold it over the past few months. This suggests the Loonie could correct some more while overstretched large speculators continue to take profits on their long positions. 



Gold futures sentiment continues to show improvement, as both net positions by total and by percentage ticked up for the 5th straight week. Gold's price-action hints of a potential monthly chart breakout of a 6-year bear trendline amid heightened overall market volatility. According to recent Oanda Corporation data, retail traders continued to sell, allowing for the persistent move down in optimism to reach the lowest levels in over a year (at 46% net long). Although, key resistance in the 1300 region was breached only briefly on Friday, the move likely softened-up the path towards the 2016 peak at 1375.




While Crude oil futures suffered a 3% drop after struggling to clear the 50 handle, positioning by large speculators only fell marginally in the same period as the latest CFTC's COT report (8/8 to 8/15). This may partly explain Crude oil's 2% recovery seen in the back half of last week. Meanwhile, gross long positions by large speculators dipped along with a modest tick up in gross shorts, allowing for the net percentage of longs to dip to 75%. Crude oil's price-action continues to reject at key weekly trendline resistance that has capped since February. If, bulls can finally clear it (now just under 50), Crude futures should extend the recent recovery towards the 52 region first, then potentially 55 further out. That said, if gross longs have indeed topped-out and the 46 threshold is decisively taken-out to the downside, then price-action could soon be headed towards the 42-44 zone.


E-mini S&P 500 futures sentiment and price action have begun to diverge. E-mini S&P 500 speculators literally doubled their net long tally as stocks technically continued to consolidate the recent run-up to all-time high. According to the latest COT data as of 8/15, large speculator's increased gross longs by 34K and covered gross shorts by nearly 40K. This suggests that large speculators are largely playing into further strength on dips for the S&P 500. That said, the data did not cover the subsequent decline seen in the tail-end of last week. Moreover,last week's data from the CFTC also contradicts with recent movement by speculators which pointed to increased pessimism. The volatile swings of optimism and pessimism, coupled with the increase in equity market volatility, suggests that overall market is gearing towards a directional breakout. Technical momentum has seemingly reversed, however, as stock indices now are technically starting to produce lower tops. Thus, a choppy decline is expected for E-mini S&P futures towards the 2400 region.



Nasdaq 100 futures speculators mildly covered (gross) short positions and mildly added gross longs, according to the latest COT report. This allowed the net long percentage to inch up to 64% and net long tally to increase by 5K.  Meanwhile, the technical picture looks a bit susceptible at the moment, as technical momentum has shifted lower. The reaction seen next week as a result of the Nasdaq 100's newly formed lower top will quickly foretell whether near-term price-action will re-test the lows seen back in May & July or not. A bearish start to next week could trigger a quick 2-3% decline (from current levels), given how long it has been since the last 5% correction occurred.






US 10-Year futures continue to grind higher on the back heightened overall market volatility, while speculators continue to slowly decrease their net long position. According to the most recent CFTC data, speculators covered some (gross) short positions and added some (gross) short positions, allowing for the net long percentage to decrease to 56%. This highlights a divergence of some sorts, as the technical base that formed in US 10-year futures at 124.80 has continued to buoy price-action towards the June peak in the mid-127 region. More importantly, however, is what occurs once price-action gets there, as it determines whether the latest 8-month recovery off the key 123 handle is merely a corrective bounce or not. 

US 30-year futures speculators optimism stalled, according to the latest COT report, as bullish sentiment halted at its 2017 high at 61%. Gross longs continued to hover near their highest level since the Financial Crisis in 2008, while gross shorts decreased by roughly 10K. Meanwhile, the recent advance in price-action has been choppy on its quest to re-test the June peak at 157.80, but is likely to do so given the upward trend that is in place technically and in sentiment.

British Pound Soars Amid Dramatic Rebound In Interest Rates

The most significant move in futures positioning (into September 12th) was with the British pound, as sentiment improved...