Weekly COT Analysis: EUR Shorts Increased

Speculative accounts added to their net euro short positions, but trimmed their net yen short positions as of October 21, according to U.S. CFTC data, released Friday.

The CFTC’s COT report – non-commercial, futures-only section, excluding options – showed speculators had a net euro short position of -159,371 contracts as of Oct. 21, versus last week’s net short of -155,342 contracts.

Traders had been eager to see the CFTC data to see if the euro short squeeze to $1.2886 on Oct. 15 caused speculative accounts to pare back their shorts. This week’s position compared to the -161,423 contracts seen Sept. 2, which was the largest net euro short since July 17, 2012 (-167,249 contracts).

A contract size over 100,000 contracts is generally viewed as extended. Spec accounts had a net yen short of -71,738 contracts as of Oct. 21, which compared to last week’s net yen short of -101,147 contracts. The net yen short of -120,878 contracts, seen
the week ending Sept. 30, was the largest net yet short since January 7, 2014 (-128,868 contracts).

The euro closed at $1.2716 and dollar-yen at Y107.00 on Oct. 21, compared to levels late Friday at $1.2668 and Y108.08.

EURUSD Outlook – Bearish

Price traded lower this week on reports of ECB bond purchases and improved US economic data. With inflation expectations continuing to fall and data from Germany coming in weaker, we remain bearish on the pair. Non Commercial positioning is still heavily short the pair and whilst we have long term shorts still in play we will look to add to shorts on a break lower this week. Indicators are all firmly to the downside bar Momentum which is around it’s midline but looks set to cross lower.

$EURUSD (Daily)  09_06_2014 - 24_10_2014

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USDJPY Outlook – Neutral

Whilst net positioning remains firmly to the upside here, other Indicators are signalling bearishness as both Index & WILLCO have crossed to the downside. We will be monitoring price for signs of any bearish rejection candles on a retest of recent highs. Positioning shows that Non Commercials remain short JPY. Expectations surrounding BoJ easing  are creating some near term uncertainty.

$USDJPY (Daily)  23_06_2014 - 24_10_2014

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GBPUSD Outlook – Bearish

Price traded lower last week on poor data and a dovish BoE minutes release. Positioning data shows Non Commercial remain short GBP. Index remains firmly to the downside and with our long term shorts still in play we will look to add to short exposure on a break below last week’s lows inline with negative signals on the indicators with Momentum & Strength having crossed to the downside.

$GBPUSD (Daily)  27_06_2014 - 24_10_2014

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USDCAD Outlook – Bullish

Despite a slightly more hawkish release from the BoC last week, positioning data shows that Non Commercials remain short CAD and indicators are firmly to the upside signalling continued bullishness. Longs are still intact currently and will be look to increase exposure on a break above recent highs.

$USDCAD (Daily)  02_07_2014 - 24_10_2014

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USDCHF Outlook – Bearish

USD bullishness setting the tone for the pair with safe haven flows having subsided on improved US data. Indicators remain firmly to the upside here signalling continued bullishness. Will be looking to add long exposure on break of last week’s high.

$USDCHF (Daily)  02_07_2014 - 24_10_2014

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AUDUSD Outlook – Bearish

Indicators remain firmly to the downside here and will look to add to our long term shorts on a break lower. Non Commercials increased their short positioning this week as CPI came in weak highlighting AUD vulnerability regarding global disinflationary pressures.

$AUDUSD (Daily)  27_05_2014 - 24_10_2014

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