- EUR/USD Euro bulls increase their bets
- GBP/USD Market remains balanced
- USD/CHF Ratio confirming EUR/USD weakness
- USD/JPY Ratio grows more net short
- USD/CAD Open interest falls 17 percent
**Twice a day SSI can be found on FXCMTR under Intraday Analytics
EURUSD - The ratio of longs to shorts is 2.37 as 70% of the currently open orders are long. The ratio has remained mostly net long for the past three weeks and has been growing more extreme in the past five days. Today, long orders are 15% higher and short orders are 5% lower than yesterday. Open interest is 8% stronger and 4% above its monthly average which combined with declining prices suggests slightly more bearish sentiment towards the euro. Looking ahead, as the ratio grows more net long the bias is for dollar strength.
GBPUSD - The ratio of longs to shorts is -1.05 as 51% of the currently open orders are short. The ratio flipped from net long last week to net short but we have seen modest volatility in the currency pair since then. Today, long orders are 30% higher and short orders are 17% lower than yesterday. Open interest is 1% stronger and 3% above its monthly average. Looking ahead, with the market balanced between buyers and sellers the near term course is unclear.
USDCHF - The ratio of longs to shorts is -1.16 as 54% of the currently open orders are short. The ratio flipped to net short on Tuesday ahead of a 50 pips rally in the Swiss. Today, long orders are 15% lower and short orders are 29% higher than yesterday. Open interest is 4% stronger and 5% above its monthly average. The ratio confirms the EUR/USD ratio and dollar strength is likely.
USDJPY - The ratio of longs to shorts is -2.78 as 74% of the currently open orders are short. Speculative positions have remained mostly net short for the past month but the short positioning is becoming less extreme as the market clears protective stops. Today, long orders are 13% higher and short orders are 11% lower than yesterday. Open interest is 6% weaker and 5% above its monthly average. Looking ahead, the bias is for dollar strength but as the ratio grows less net short gains could be limited.
USDCAD - The ratio of longs to shorts is 1.79 as 64% of the currently open orders are long. Today, long orders are 1% higher and short orders are 1% lower than yesterday. Total open orders were cut by 16.8 percent which often means that short covering and not fundamental reasons were fueling the rising trend.
How To Interpret The SSI
The FXCM SSI is based on proprietary customer flow information and is designed to recognize price trend breaks and reversals in the four most popularly traded currency pairs. The absolute number of the ratio itself represents the amount by which longs exceed shorts or vice versa. For example if the EURUSD ratio is 2.55, long customer orders exceed short orders by a ratio of 2.55 to 1. If the EURUSD ratio is -3.00 short customer orders in the EURUSD exceed long orders by a ratio of 3 to 1. A negative number indicates that traders are net short while a positive number indicates that traders are net long. Conceptually similar to contrarian analyses using the CFTC IMM open position data or COT Report, the SSI provides an alternative approach that is both more timely and accurate in forecasting currency price movement. The SSI is a contrarian indicator that tells you how the market is weighted and where the trend may head.
