Weekly COT Analysis: EUR Shorts Highest Levels Since Inception

  • CFTC data USD aggregated net long positions decreased 8.9%% to $40.1bln as trader reduced long USD bullish bets ahead of Friday’s weaker than anticipated payrolls data
  • EUR net spec shorts increased from 220,963 last week to 226,560 contracts this week which is the highest level since the EUR’s inception in 1999.
  • JPY short positioning decreased 48.1%% to 23,924 contracts.
  • AUD net shorts decreased a further17.1%% to 24,356 contracts.

EURUSD OutlookBearish

Summary:  Tumbled early last week as concerns mount over Greece with the due date for it’s payment to the IMF approaching, and currently outweighing any reflationary signs out of the Eurozone. Saw late strength on Friday’s NFP miss but has since struggled once again to gain any meaningful traction with a third rejection above the 1.10 handle. Data this week focuses on Eurozone PMIs.

  • Strength active sell signal, at new lows
  • Index active sell signal, at extreme lows.
  • Momentum active sell signal, bearish move from convergence continues
  • Order Flow Trader bullish

2015-04-07 13_35_13-

2015-04-07 13_36_20-Reuters - currency futures positioning

GBPUSD Outlook –  Bearish

Summary:  A very erratic week for the UK currency last week, which saw negative action despite better PMI prints. Concerns over the upcoming election are worrying investors. The principal concern surrounding this issue is that of whether or not the party or parties which form the Government will indeed hold an EU referendum which may reduce investment flows. Trading up through this year’s highs on the weak US NFP. The BoE releases it’s rate decision and asset purchase target on Thursday which will be keenly observed given the recent weak data out of the UK

  • Strength active sell signal, ticks up from last week’s lows
  • Index active sell signal, ticks up from last week’s lows
  • Momentum active buy signal, bullish cross losing upside momentum
  • Order Flow Trader bullish

2015-04-07 13_38_33-

2015-04-07 13_39_32-Reuters - currency futures positioning

USDJPY Outlook – Bullish

Summary:  Fell early last week on weaker industrial production numbers but recovered some ground as USD positions began to see paring heading into the NFP crunch. JPY has been benefiting from safe haven flows stemming from a raft of global tensions and has benefited too from the drop in oil and continued to benefit on Friday. BOJ monetary policy statement and trade balance data will be the key focal points this week.

  • Strength active buy signal, continues to decline from January highs
  • Index active sell signal, at 2015 lows
  • Momentum active sell signal, retests 2015 lows
  • Order Flow Trader bearish

2015-04-07 13_42_22-

2015-04-07 13_43_19-Reuters - currency futures positioning

USDCHF Outlook – Bearish

Summary:  Although data out of the states has been softer recently, so too has data elsewhere. However all strength was reversed on Friday following the shockingly low NFP print and now markets are beginning to move back rate hike expectations, threatening a further USD correction. It appears that the SNB has stayed away from the FX markets. However, be cautious of rapid moves as this could cause the central bank to expect a larger deflationary impact on the economy from the exchange rate and therefore start to intervene again. USDCHF has started to turn around and the risk that this trend continues lies from the USD side.

  • Strength active buy signal, Continues to test 2015 lows
  • Index sell signal active, retesting 2015 lows
  • Momentum sell signal active, continues to retreat from recent highs
  • Order Flow Trader bearish

2015-04-07 13_48_56-

2015-04-07 13_51_18-Reuters - currency futures positioning

AUDUSD Outlook – Bearish

Summary: An extremely hard fought week for the Aussie as price printed new yearly lows. Iron ore prices have been plummeting and markets are increasing expectations of an RBA rate cut at the next meeting this week. Bounced from yearly lows on Friday’s NFP print but not to the extent that we saw across the G10 as the weak commodity story and rate cut expectations continued to weigh into the close of the week, but with RBA on hold we have seen a sharp short squeeze overnight.

  • Strength active sell signal, consolidates gains continues to 2015 highs
  • Index active buy signal, ticks higher confirms bullish signal
  • Momentum active buy signal, ticks higher confirms bullish signal
  • Order Flow Trader bearish

2015-04-07 13_55_07-

2015-04-07 13_55_49-Reuters - currency futures positioning

USDCAD Outlook – Bullsih

Summary:  The better GDP print bolstered the Canadian currency but many feel the Canadian economy is heading for trouble which is creating limited directional flow on better data. A significant rebound in oil prices is needed to hold the CAD case. Saw strong inflows last week and continued to outperform on Friday. Unemployment rate the headline data for the week.

  • Strength active buy signal, consolidates pullback from 2015 highs.
  • Index active buy signal, continues to pullback.
  • Momentum active buy signal, continues to pull back.
  • Order Flow Trader

2015-03-30 13_51_07-

2015-04-07 14_00_45-Reuters - currency futures positioning