Weekly COT Report: EUR Bears Back In Business

Trading Themes: The US Dollar traded higher over the week supported by another debate win Hilary Clinton on Sunday night. These moved were then furthered by the release of the September FOMC meeting minutes which revealed that many members judged the decision to remain on hold in September as a “close call”.  The minutes confirmed markets expectation of a December rate hike fuelling a strong Dollar bid.

EUR: EUR under pressure ahead of ECB
GBP: Brexit developments keep sentiment heavy
JPY: JPY steps out of the spotlight for now as risk-on mood sees safe-haven demand diminished
CHF: Swiss Franc weaker amidst lack of safe haven demand
AUD: Strong China data keeps rate supported. RBA meting minutes and Unemployment rate in focus this week
CAD: Firm Oil prices keep CAD supported. BOC rate decision key focus this 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, increased on the week
  • GBP bearish, increased on the week
  • JPY bullish, decreased on the week
  • CHF bearish, increased on the week
  • AUD bullish, flat on the week
  • CAD bullish, flat on the week

EURUSD Outlook – Bearish

A stronger USD weighed on the Euro which broke down to three month lows on reports that the ECB is to consider extending its QE program beyond March 2017 at the upcoming monetary policy meeting next week.  On the data front Eurozone’s industrial output increased 1.60% MOM in August, reversing the revised 0.70% MOM fall in July. There was a broad based pick up in factory production from July to August, spanning from energy to capital goods output, soothing slowdown concern.

COT Indicators

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

LFOrder Flow Trader Bearish


GBPUSD Outlook – Bearish

Sterling was initially stronger on the week following reports of a turnaround by UK PM May which would allow members of parliament o debate her Brexit plan and possibly vote on. This suggested that the UK could avoid a Hard Brexit afterall. However, gains were reversed when, speaking on Wednesday, PM May promised lawmakers would get to debate her negotiating strategy, but refused to say whether they would also get a vote

COT Indicators

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

LFOrder Flow Trader Bearish


USDJPY Outlook – Bullish

Japan’s machine tool orders fell 6.30% YOY in September, moderating from the 8.40% YOY pace in August. The headline number was helped by softer pace of decline in domestic orders but extended contractions suggested that overall demand was weak. Japan‘s tertiary industry index indicated that growth in the services sector was flat in August after a revised 0.20% MoM acceleration in July. Finance and insurance companies, business related services and retail trade firms were the main drag to the headline number.

COT Indicators

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

LFOrder Flow Trader Bearish


USDCHF Outlook – Bullish

The Swiss Franc has weakened over recent weeks amidst a broadly risk on tone. Focus this week will be on Q2 GDP as well as Inflation data for August. SNB easing expectations have been paired slightly in the wake of the currency’s decline over recent weeks though the central bank is expected to continue to warn against any further strength.

COT Indicators

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

LFOrder Flow Trader Bullish


AUDUSD – Outlook Bullish

Despite initial weakness as the Us Dollar soared, the Aussie recovered into the end of the week driven by better China inflation data which offset poor trade data and felled Aussie demand. The moves in Oil markets have kept risk sentiment firm this week adding further support.

COT Indicators

  • Strength active buy signal consolidates
  • Index buy signal consolidates
  • Momentum sell signal consolidates

LFOrder Flow Trader Bullish


USDCAD OutlookBullish

The Canadian Dollar strengthened over the week driven by higher Oil prices with Crude breaking back above the $50 mark this week. Traders now look ahead to domestic CPI data next week for September.

COT Indicators

  • Strength buy signal consolidates
  • Index active buy signal consolidates
  • Momentum buy signal consolidates

LFOrder Flow Trader Bearish