Weekly COT Report: JPY Bulls Bet Bigger Ahead Of BOJ

Trading Themes: The US Dollar was out of the spotlight last week in the absence of any key data. Moves, whilst limited, were broadly USD positive, with the Dollar still finding support from recent Fed comments leaning towards a possible June hike. Attention now turns to the April FOMC meeting which, although not expected to see the Fed increase rates further, Bulls will be hoping sheds further light on the chances of a June hike.

EUR: Recent ECB meeting opens the door for further easing if low-inflation persists. EZ inflation data in focus later in the week.
GBP: An improvement in the Brexit outlook keeps rate supported. GDP data in focus this week.
JPY: BOJ meeting in focus this week. Investors expect further easing but remain sceptical of effectiveness.
CHF: A lack of EUR downside keeps the pressure off the SNB for now.
AUD: RBA meeting minutes show the central bank is wary of further AUD strength.
CAD: Supported by stronger Oil and better-than-expected CPI print. GDP data in focus later in the week.

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

EURUSD Outlook – Bearish

Draghi poured on the Dovish rhetoric at the April ECB meeting noting that rates are expected to stay at present levels or lower for an extended period with the bank ready to act further if the low inflation environment persists. Traders now turn their attention to the latest EuroZone inflation data due on Friday with the last two EZ prints having both beat expectations.

COT Indicators

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

LFOrder Flow Trader Bearish

eucot

GBPUSD Outlook – Bearish

A recovery in risk-appetite last week leant support to the beleaguered British Pound which sustained a second positive week as the latest Brexit polls show growing support for the UK to stay in the EU. The latest earnings and employment data showed that Average Weekly Earnings fell back to 1.8%, the lowest level since 2010, highlighting the BoE’s view that low inflation is weighing on wage-growth. Domestic data focus this week will be on GDP due on Wednesday.

COT Indicators

  • Index sell signal, ticks down
  • Strength sell signal ticks lower
  • Momentum sell signal turns flat, await new signal

LFOrder Flow Trader Bullish

gucot

USDJPY Outlook – Bullish

The Japanese Yen softened last week as a recovery in risk appetite weighed on safe-haven demand. The upcoming April 28th Bank of Japan now looms large with growing expectation of further easing to come. The meeting will be followed by the latest Japanese inflation data.

COT Indicators

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

LFOrder Flow Trader Bullish

uchfcot

 

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

uchfcot

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 Bearish

aucot

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

LFOrder Flow Trader Bearish

uccot