Weekly Futures & FX Positioning Report - July 9, 2017

Crude Oil Vulnerable To Further Downside; Loonie & Pound Make Significant Moves In Sentiment

●  Large speculators (non-commercials) in Japanese yen futures increase bearish bets for 3rd straight week, according to the latest CFTC IMM report through last Monday (July 3rd).  
●  Euro short reduction remains the theme, while British pound specs grow less pessimistic.       
● Canadian dollar makes most significant (bullish) move in sentiment; Aussie (speculative) longs continue to ascend.
 ● Crude oil remains vulnerable to further downside; Gold pessimism grows as (non-commercial) net longs fall to lowest level since 2015.   
 ●  Nasdaq 100 futures (speculators) build largest (gross ) short position in over 7 years; E-mini S&P speculators cover gross shorts to lowest level since January. 
 ● US 30-year futures speculators caught covering shorts into weakness, while US 10-year futures speculators smartly re-up gross short positions.       

JY: Bearish bets by non-commercial speculators increased for the 3rd straight week, bringing the net (contracts) to -75K and the percentage of long positions to 27%. Retail traders, however, have continued to fight the latest bout of Yen weakness, taking the net percentage of longs to 49%. Meanwhile, the price of Yen futures fell 0.92% into July 3rd (holiday schedule) and fell an additional 0.46% into the weekend (July 7th). This suggests speculative bears remain in control and are expected to re-test (USD/JPY) key resistance at 104.36 (5/10/17 high).

EC/BP: Euro futures (speculative) short reduction (gross & net) remains the on-going theme as the net long tally headed further back towards the June high (79k). Interestingly, commercial traders participated in the EUR's recent rebound, raising gross short positions by 8K. British pound (speculative) sentiment made a  significant push towards net (positions) parity, as gross long contracts bumped up by roughly 9K.  Recent price-action in Sterling, highlights potential significant resistance at 1.30 (GBP/USD). Meanwhile, retail traders in both the euro and pound remain rather skeptical, merely consolidating recent skepticism. This bodes well for dollar bears as long as retail traders remain reluctant to follow recent strength in the euro and pound.

AD/CD: Canadian dollar futures have continued to make solid strides in both price and sentiment, with net (speculative) longs rising in both in net contracts and percentage for the 7th straight week. That said, the Loonie remains the most (net) short major currency besides the Japanese yen. Retail traders, however, continue to be extremely pessimistic, with only 27% of outstanding contracts long. Although, there is plenty of room to go for speculative bulls, there are minor signs that retail traders have potentially exhausted their pessimism, which could suggest some minor consolidation in price-action. Meanwhile, Aussie speculators continue to grow gross longs, taking the net long percentage to 70%. While, AUD speculative bulls look poised to continue their run, retail trading behavior looks to have bottomed (in terms of Aussie pessimism), which could suggest Australian dollar futures strength could be stalling.

GC/CL:Crude oil price-action was decisively volatile in both time frames, before and after quarter-end and the start to the 2nd half of 2017. After rallying into last Monday (July 3rd) 6.53%, bulls gave back roughly two-thirds of those gains rather quickly, to hint of at least a re-test of key support at 42 and perhaps lower. This leaves Crude oil speculators vulnerable to further gross long reduction with the net percentage (of large speculators) at rather lofty levels (68%). Gold futures, meanwhile, also seem poised for further deterioration in both price-action and sentiment, as both have broken key lows set in May. That said, retail sentiment is overly bullish for gold and is testing the May extreme peak, which could hint of temporary pause in the price in Gold before heading eventually lower. 

ES/NQ: Large speculator's gross shorts in E-mini S&P 500 futures continue to dwindle towards the low-end of the year, as the short-covering theme continues to buoy the bull run in price-action. Nasdaq 100 futures, on the other hand, have built the largest gross short position in over 7 years! The divergence in sentiment between ES & NQ futures sentiment has mimicked recent price-action and hints of a trading range for equity markets.

TY/US: US 30-year futures speculators have been caught fighting the latest (bearish) shift in treasury markets. While price-action has fallen 1.69% (in the period into 7/3),  gross short positions by non-commercial traders were reduced by 14K. Commercial traders, however, didn't offset the non-commercial reduction, but rather reduced their gross shorts by 8K. This explains that so-called "smart money" is on the short side and that next week's CFTC IMM report should show a sizeable reduction in in gross longs. Meanwhile, US 10-year futures speculators have correctly played the bearish shift in price-actions, by re-upping gross short positions as 10's sold-off by nearly 1% in the same period.

(Full report )7.9.17