Weekly COT Report: Swiss Franc Bulls Battle On

Trading Themes:The US Dollar made its way higher last week, despite yet further disappointing data, supported by comments from a raft of Fed members who continue to argue the case for continuing the path to normalisation amidst growing inflation and a stronger economy. Data however is still failing to support this view with March Retail Sales printing well below expectations and March CPI missing the mark also. Not a lot in the way of key data this week for the US, with Manufacturing PMI on Friday the key print.

EUR: ECB meeting on Thursday the key focus for the week.
GBP: Earning and employment data on Wednesday the key focus for the week
JPY: Strong start to the week on safe-haven demand in wake of earthquakes and failed Doha talks over the weekend.
CHF: A lack of EUR downside keeps the pressure off the SNB for now.
AUD: RNA meeting minutes in focus alongside speech from RBA governor Stevens.
CAD: Under pressure on fresh Oil selling. Traders look ahead to CPI data on Friday.

Let’s take a look at what the latest COT report data is showing us from a trend and net change week over a week perspective…

  • EUR bearish, flat on the week
  • GBP bearish, decreased on the week
  • JPY bullish, flat on the week
  • CHF bullish, increased on the week
  • AUD bullish, flat on the week
  • CAD bearish, decreased on the week

EURUSD Outlook – Bearish

The Euro softened last week on light flows ahead of next week’s ECB meeting. A disappointing EuroZone Industrial Production print for March weighed on rate though a better than expected March CPI print stemmed the flow. Traders not expecting too much from the ECB’s first meeting since the the introduction of a second TLTRO package , but will be keen to hear the banks assessment of developments since.

COT Indicators

  • Index active buy signal ticks up
  • Strength active sell signal ticks up
  • Momentum buy signal given

LFOrder Flow Trader Bearish


GBPUSD Outlook – Bearish

In their April rates meeting the Bank Of England voting unanimously to keep rates on hold at current 0.50% levels citing potential risk to Q1 growth from the forthcoming EU referendum which they also say is making data harder to interpret and as such will be reacting more cautiously than normal. On the plus side the bank did note that the combination of stronger Oil and weaker Sterling is likely to stoke inflation and that disappointing US GDP is mitigated by a shrinking Chinese risk. Key data prints this week will be earnings and unemployment data on Wednesday.

COT Indicators

  • Index sell signal, ticks down
  • Strength sell signal ticks lower
  • Momentum sell signal ticks up

LFOrder Flow Trader Bullish


USDJPY Outlook – Bullish

The Japanese Yen was broadly weaker last week experiencing diminished safe-haven demand as risk-appetite recovered over the week with the Nikkei seeing its biggest weekly gain since October 2014. However, fresh Oil selling following the weekend’s failed Doha talks and earthquakes in Japan have seen JPY safe-haven bid return as we start the week. Focus remains on the BOJ’s upcoming April meeting with markets gauging the likelihood of further easing from the bank in the wake of a raft of official commentary recently.

COT Indicators

  • Strength active sell signal, ticks down
  • Index active sell signal  ticks down
  • Momentum flat, awaiting new signal

LFOrder Flow Trader Bullish


USDCHF Outlook – Bullish

With EUR having moved counter-intuitively higher in response to the latest ECB measures, it seems some pressure has likely been alleviated from the SNB who refrained from moving on rates at their recent meeting. Worth noting however that recently  SNB’s Jordan has warned of a “nuclear” option in the event of continued CHF appreciation stating that the SNB can cut the exemption from negative deposit rates that it extended to most domestic banks’ reserves. The latest CPI data for Switzerland showed that inflation grew 0.3% MoM as expected, adding support for the Swiss Franc.

COT Indicators

  • Strength active sell signal given
  • Index active sell signal, ticks down
  • Momentum active sell signal ticks up

LFOrder Flow Trader Bullish


AUDUSD – Outlook Bullish

A recovery in risk appetite last week added support for the Australian Dollar which was also bolstered by strong domestic jobs data. Australian Unemployment rate in March ticked down to 5.7% against expectations of 5.9% showing continued resilience in the domestic labour market. Despite continued strength, traders are wary of potential RBA intervention into these higher levels. RBA meeting minutes will provide further colour this week alongside RBA governor Stevens who speaks in New York.

COT Indicators

  • Strength active buy signal, ticks up
  • Index active buy signal ticks up
  • Momentum signal turns flat, await new signal

LFOrder Flow Trader Bullish


USDCAD OutlookBullish

A return to strength in Oil prices last week has added continued support for the Canadian Dollar. The BOC kept rates on-hold at their April meeting though the accompanying statement was less neutral than last time with the bank saying weaker global growth, a less favourable US outlook and shrinking business investment would drive the economic outlook lower if not for the boost from the government’s fiscal stimulus. Domestic data focus this week will be on Retail Sales and CPI data on Friday.

COT Indicators

  • Strength sell signal given
  • Index active sell signal remains at lows
  • Momentum sell signal, ticks up

LFOrder Flow Trader Bearish