Weekly COT Report

Trading Themes: US Dollar was driven lower last week on Dovish comments from Fed President Dudley which came amidst a raft of weak US data including ISM Manufacturing & Non-Manufacturing misses. Dudley cooled rate-hike expectations ahead of the March FOMC citing tighter US financial conditions and a weaker global economy. A dismal January NFP was offset by an unexpected drop in the Unemployment rate and a similarly unexpected rise in wage-growth. Retail Sales and Michigan Confidence the headline data for the week.

  • EUR: German Industrial production and Gross Domestic Product on watch
  • GBP: Industrial and Manufacturing production data takes the lead from Brexit headlines
  • JPY: The BoJ inspired Negative Interest rally has reversed and given back all its gains
  • CHF: SNB Head Jordan reiterates his belief that the CHF remains overvalued in comments last week, CPI data on watch
  • CAD: Continued Crude bounce supports CAD
  • AUD: RBA remain on hold but have left the door open for further easing

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

EURUSD – Outlook Bearish

Despite a raft of data weakness out of the EuroZone and Dovish comments mid-week by ECB President Draghi, the Euro was stronger over last week benefiting from a weaker US Dollar driven by unwinding US rate hike expectations and falling equity markets which were sent lower on a renewed down-turn in oil. EuroZone & German GDP the headline data for the week.

COT Indicators

  • Strength active sell signal, ticks up
  • Index active buy signal, enter long positions at Friday’s close or better
  • Momentum active sell signal, ticks up towards convergence

LFOrder Flow Trader Bullisheucot1

GBPUSD – Outlook Bearish

Plenty of short positions were pared ahead of the February BOE meeting which saw GBP strengthen across the week. The meeting passed in a fairly muted fashion and as expected the BOE revised lower their short term forecasts but lifted their medium term inflation forecast which is expected to see the Bank’s 2% target hit by 2018. Trade Balance and GDP estimate the key data for the week.

COT Indicators

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

LFOrder Flow Trader Bearishgucot1

USDJPY – Outlook Bullish

With Oil and Equity markets sliding, safe-haven demand saw the Japanese Yen strengthening sharply over an extremely volatile week trading back up to recent highs and fully reversing the losses suffered in the wake of the January BOJ meeting which saw the BOJ cutting Japanese rates into negative territory for the first time. Japanese Trade Balance data the key domestic release this week.

COT Indicators

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

LFOrder Flow Trader Bearishujcot1

USDCHF – Outlook Bullish

“We’re convinced the franc remains overvalued and that’s why our monetary policy is designed to reduce the pressure on the Swiss franc with these two pillars – negative interest rates and the willingness to intervene in currency markets if necessary,” President of the SNB Jordan said

COT Indicators

  • Strength active buy signal, consolidates gains
  • Index active sell signal, ticks up
  • Momentum active sell signal, ticks down

LFOrder Flow Trader Bearishuchfcot1

AUDUSD – Outlook Bearish

Despite a dampened risk sentiment last week, the Aussie took full advantage of broad US Dollar weakness, ripping higher as US rate-hike expectations dwindled. The RBA left rates unchanged at their February meeting though did leave the door open for further easing citing a subdued inflation outlook. An absence of key domestic data will leave the Aussie trading on Risk and USD flows.

COT Indicators

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

LFOrder Flow Trader Bullishaucot1

USDCAD OutlookBullish

The Canadian Dollar continued to strengthen last week, again benefiting from sharp USD weakness driven by poor data and Dovish Fed commentary, though some gains were retraced on Friday as the latest Canadian Unemployment data showed an unexpected increase with rate increasing to 7.2% from 7.1% previous. An absence of key domestic data will leave CAD driven by USD and Oil flows.

COT Indicators

  • Strength active buy signal, ticks down
  • Index active buy signal, ticks down
  • Momentum sell signal, ticks down

LFOrder Flow Trader Bearishucadcot1