Saturday October 28, 2017 - 12:25:52 GMT
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Commitment Of Traders Report for 24 October 2017 Data Register To Test Your Amazing Trader
Forex trading is all about stops. The Commitment of Traders Report (COT) is an imperfect, but useful, "sampling" of market positioning. I would prefer more frequent and precise readings, but we have to live with what we get. The data work for the purpose of getting an idea if traders are positioned long or short and if they in big or small.
EURUSD net long positions remain in a roughly steady 80-100K contracts range. The heavy blue line (once a week spots) provides a useful perspective on the price action. In the latest week the market has fallen decisively through the bottom of the prevailing 1.18 to 1.20 band to the high 1.1500 area.
As the alternatine reserve currency to the USD, keep in mind EUR positions are not just against the USD. EUR crosses vs. the JPY and GBP are critical. The European economy continues to improve and that should remain a EUR positive.
The market remains long USDJPY (short JPY). Note from the chart how JPY open interest closely tracks the USDJPY exchange rate. The North Korea threat has faded but remains an ever-present issue.
The USDJPY has always been heavily manipulated by the Bank of Japan. It typically tries to keep the currency depressed to promote exports. Whenever the USDJPY starts to slide, expect to encounter covert BOJ USDJPY support. The USDJPY often correlates positively with the yield on the U.S. 10-yr note, which recently has started to climb.
Net GBPUSD positions flipped long three weeka ago, but are now back square. BOE Governor Carney recently turned the tone of policy statements to hawkish. A rate hike is anticipated in the week ahead. The GBPUSD spot line (heavy blue) has been reflecting an improving outlook for the U.K. economy.
This GBPUSD pair is more sensitive than most to its economic data. This characteristic makes it more attractive to those of us who rely on active markets. Keep an eye on the EURGBP cross as a barometer of flows in and out of the EUR. These flows often directly impact both units against the USD so should be watched by active traders.
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