Weekly Futures & FX Positioning Report - June 24, 2017

Euro Ends 2-month Short-covering Trend as Gross Shorts Increase By Nearly 50% ; Aussie Specs Add Very Bullish Position

●  Large speculators (non-commercials) in the Aussie (Australian dollar futures) and Euro futures made the most significant moves in the FX market, according to the latest CFTC IMM report through last Tuesday (June 20th).  Euro's 2-month short-covering trend (for large specs) came to an abrupt halt as gross shorts exploded by roughly 50%. The Euro's net long mark had reached levels not seen since October 2013 prior to last week's turnaround. Large speculators in Crude Oil futures continued to add short positions, to near the 300K contract mark once again.  While Oil prices have dipped to fresh 2017 lows, gross short positions and the overall net long position have not reached extremes yet. That said, both have inched closer to levels seen back in  May and previously in 2016, suggesting a temporary low could be near after perhaps the next thrust lower to 40. Both Nasdaq 100 & E-mini S&P futures saw large speculators reduce long exposure, highlighting a significant drop in open interest.

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Weekly Futures & FX Positioning Report - June 18, 2017

Euro Specs Largest Net Long Position Since 2013 Amidst Short-Covering Trend ; Treasury Specs Add Big Net Long Position


 Large speculators (non-commercials) in the Loonie (Canadian dollar futures) and Euro futures made the most significant moves in the FX market, according to the latest CFTC IMM report through last Tuesday (June 13th).  Euro gross short positions were trimmed vs the greenback once again, highlighting a 2-month short-covering trend for large specs. The Euro's net long mark reached levels not seen since October 2013. The Loonie, however, was the top performer among major currency pairs, rebounding for the 2nd straight week. Treasury speculators grew net long positions in a big way, adding roughly 60,000 (net) contracts for US 30-year & 10-year futures. Lastly, large speculators in Crude Oil futures grew gross short positions by over 15% ahead of another rough week for the energy complex that saw Oil prices dip over 3% once again. While energy prices are at new 2017 lows, gross short positions are still a distance from the May high and early 2016 levels.



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Two Trendlines To Pay Attention To This Week

The Japanese yen and Gold have gone hand-in-hand most of the year, in other words their moves have been highly correlated or directly inversely correlated, depending on how you look at it. More importantly, the two seem to be flirting with key trendlines, which if either are broken, could have huge ramifications for global markets.

Gold futures are testing a huge (down) trendline that goes back roughly 6 years ago during the end of the great bull run that the "yellow metal" enjoyed over several decades. The monthly chart shows several relevant touches, most recently last July when gold prices drove to 1375 (an exact Fibonacci retracement of the prior decline) and failed.

Since then, Gold has gyrated in a large range, but is testing the psychological 1300 region, which has capped now twice over the past few months. Depending on how you draw trendlines (I tend to intersect as many price points as possible), the trendline on a daily chart basis has been broken but failed to hold. The ensuing decline, however, paused exactly at a 38.2% fibonacci retracement level and the 20-day MA (which can be seen in the daily chart below).

On a monthly chart, bulls have only managed to probe the trendline, failing thus far on a monthly closis basis. If risk aversion increases as seen by various metrics on Friday, Gold could easily break and close above the monthly trendline. With political uncertainty and a lot of the month of June still to go, we'll have to monitor closely whether this calls for an upside breakout or whether this trendline stays in-tact.

The Japanese yen tested a key trendline last week too, but not nearly on the scale of gold's long-term down-wardly sloped trendline. On Friday, the USD/JPY touched this line for the third time, thereby validating a 1-month bear trendline.  This also occurred, co-incidently, while Gold was retracing its move off the recent cycle's high and bottomed (for the time being) at the 20-day MA and a key fib retracement.

Unfortunately, both these trendlines will not likely hold up due to the way the correlation between the two (Gold and yen) have held for some time. That said, a break in either of these trendline situations is likely to not only affect the other, but also have impact on all markets given the importance of both of these technical formations. PR

Weekly Futures & FX Positioning Report - June 10, 2017

Nasdaq shorts at highest level in a year while bets vs the USD pull-back prior to last week's reversals

●  Large speculators (non-commercials) in the Loonie and Pound made the most significant moves in the FX market, according to the latest CFTC IMM report through last Tuesday (June 6th).  Gross long positions were trimmed vs the greenback with exception to the Loonie, which may partly explain last week's (USD) minor recovery. Treasury speculators continued to grow gross shorts heading into last week and were finally rewarded as US treasury yields managed to bottom off the years' lows. Both ES (e-mini S&P 500 futs) and NQ (e-mini Nasdaq futs) were mostly unchanged on a net basis, as both gross long and shorts positions were added. Nasdaq gross shorts, however, grew to their highest level in nearly year, which may have contributed to Friday's strong pullback. Lastly, large speculators by both Gold and Crude Oil futures grew gross short positions more than gross longs, allowing relatively elevated net long positions (by percentage) to pull-back slightly. PR

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