Amid the short term volatile market moves, it helps to step back and look at big picture indicators such as COT (Commitments of Traders) reports. Friday's report sheds some light on whether today's USD sell-off is likely to continue.
Latest CFTC Release Dated January 08, 2008:
13 Week COT Index: see description just below the COT Index table
US Dollar Index: The % of total commercial positions that are long measured through a 52 week percentile is at 14 and the % of total speculative positions that are long measured through a 52 week percentile is at 82. The 52 week COT index has rolled over from 100 and is at 84. Given that positioning has turned from a bullish extreme, expect the USD to decline.
Signal: Bearish
EUR: The % of total commercial positions that are long measured through a 52 week percentile is at 67 and the % of total speculative positions that are long measured through a 52 week percentile is at 12. The 52 and 13 week COT indexes have turned up from 0 (bearish extreme) and are now bullish.
Signal: Bullish
GBP: The % of total commercial positions that are long measured through a 52 week percentile is at 94 and the % of total speculative positions that are long measured through a 52 week percentile is at 4. Cable is at a bearish sentiment extreme and should bottom very soon (maybe this week).
Signal: Forming a bottom
CHF: The % of total commercial positions that are long measured through a 52 week percentile is at 12 and the % of total speculative positions that are long measured through a 52 week percentile is 88. CHF buying has accelerated recently and a bullish extreme has yet to be registered so continue to favor CHF strength.
Signal: Bullish
JPY: The % of total commercial positions that are long measured through a 52 week percentile is at 8 and the % of total speculative positions that are long measured through a 52 week percentile is at 96. The 52 week COT index is also at 96, indicating that a bullish sentiment extreme has been registered. After reaching a bullish sentiment extreme, favor the downside.
Signal: Bearish
CAD: The % of total commercial positions that are long measured through a 52 week percentile is at 61 and the % of total speculative positions that are long measured through a 52 week percentile is at 29. The 52 week measure is trending down, indicating that the larger trend is down but the 13 week index is at 0, so be careful of a CAD rally near term.
Signal: Bearish
AUD: The % of total commercial positions that are long measured through a 52 week percentile is at 59 and the % of total speculative positions that are long measured through a 52 week percentile is at 14. The 52 and 13 week COT indices are at 24 and 50. All indicators have turned up from close to extremes, so favor the upside.
Signal: Bullish
NZD: The % of total commercial positions that are long measured through a 52 week percentile is at 18 and the % of total speculative positions that are long measured through a 52 week percentile is at 61. The 52 and 13 week COT indices are at 55 and 92. COT information warrants a cautious bullish stance since the indices are trending up.
Signal: Bullish
