Speculative US Dollar long positions continue to increase as do commercial short positions. Until the 13 week index is at 100, this is bullish evidence. The currency that could fall the most is the British Pound. British Pound speculators are net short and commercials net long. This is bearish, especially since the difference between sepcs and commercials is not large.
The COT Index is the percentile of the difference between net speculative positioning and net commercial positioning measured over a specific number of weeks (either 52 or 13). A reading close to 0 suggests that a bottom is forming and a reading close to 100 suggests that a top is forming. The readings are for the actual currency, not the currency pair. For example, a reading of 100 on the Canadian Dollar suggests that the Canadian Dollar is close to a top (USDCAD close to a bottom).
Readings of 95 and higher as well as 5 and lower are in boldfaced red type to indicate potential market extremes. For example, an increasing index is bullish until the index is extreme (near 100), at which time the risk of a reversal or pause in the trend increases.
US Dollar
US Dollar Index: Speculative long positions continue to increase as do commercial short positions. Until the 13 week index is at 100, this is bullish evidence.
Implications: bullish
Euro
EUR: Speculators are sliughtly net short and commercials slightly net long. This is bearish since the difference between sepcs and commercials is not large.
Implications: bearish
British Pound
GBP: Similar to the euro, British Pound speculators are net short and commercials net long. This is bearish, especially since the difference between sepcs and commercials is not large.
Implications: bearish
Australian Dollar
AUD: Australian Dollar speculators are net short and commercials net long. This is bearish, especially since the difference between sepcs and commercials is not large.
Implications: bearish
New Zealand Dollar
NZD: New Zealand Dollar speculators are net short and commercials net long. However, the 13 week index is at 0. This warns that the difference between speculative and commercial positioning may need to decline prior to resumption of the trend. The long term trend is still down however.
Implications: neutral
Japanese Yen
JPY: Speculators are long Yen (short USDJPY) and commercials are short Yen. The difference between the 2 groups is decreasing, which is Yen bearish (USDJPY bullish).
Implications: bearish
Canadian Dollar
CAD: Speculators are short CAD and commercials are long CAD. This is CAD bearish since the difference between the two groups is not large.
Implications: bearish (bullish USDCAD)
Swiss Franc
CHF: Speculators are short CHF and commercials are long CHF. This is CHF bearish since the difference between the two groups is not large.
Implications: bearish
Jamie Saettele publishes Daily Technicals every weekday morning (930 am EST), COT analysis (published Monday mornings), technical analysis of currency crosses throughout the week (EUR on Tuesday, JPY on Wednesday, GBP on Thursday, AUD on Friday), and the DFX Trend Index every day after the NY close. He is also the author of Sentiment in the Forex Market.
Contact at [email protected]
