Weekly COT Report: JPY Bulls Retreating

Trading Themes Janet Yellen will testify before Congress’s Joint Economic Committee. Heading into the testimony the USD Index has been strongly bid since President elect Trump was confirmed last week. With the market ramping up December rate hike odds to a near certainty their is certainly some scope for a pull back on any dovish comments from today’s speech. The release of her initial comments suggest the FED still sees room for expansion in the labour market. December seems to be on track according to the prepared remarks but she seems to be cautious regarding the outlook for 2017. In G10 FX GBP extended north to 1.2507 after big UK retail sales beat +7.4% y/y vs revised 4.2% previous and 5.3% expected

EUR: EuroZone growth in the spotlight this week with PMIs due on Wednesday
GBP: Key domestic data focus will be GDP on Friday.
JPY: Traders will be watching CPI data due on Thursday.
CHF: An absence of key domestic data this week leaves focus on risk flows
AUD: Aussie to take its cues from the US Dollar and commodity prices this week
CAD: Oil continues to present a challenge for CAD ahead of the OPEC meeting next 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, decreased on the week
  • GBP bearish, decreased on the week
  • JPY bullish, decreased on the week
  • CHF bearish, decreased on the week
  • AUD bullish, increased on the week
  • CAD bearish, decreased on the week

EURUSD Outlook – Bearish

Continued the decline on Wednesday and hit fresh 11-month lows under 1.0700, closing for an eighth consecutive day, as the greenback remained strong in the market. EUR attempted to recover ground after the release of US data that showed lower-than-expected reading in the PPI and in the industrial production report, the recovery was short-lived and it turned to the downside again after finding resistance at 1.0720 level.

COT Indicators

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

LFOrder Flow Trader Bearish


 GBPUSD Outlook – Bearish

Edged lower against the stronger USD, as markets shrugged off UK upbeat jobs data which showed UK jobless rate falling to the lowest level at 4.8% in 11 years. Instead, traders continued to focus on the risks surrounding Brexit. Adding to further pressure on the sterling was a lower-than-expected inflation data, which showed price growth still below half of the BoE’s 2% target

COT Indicators

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

LFOrder Flow Trader Bearish


USDJPY Outlook – Bullish

Japan’s inflation will turn positive more quickly than projected by the Bank of Japan (BoJ) if the yen remains at its current level around 110 per dollar for a few months, according to a former central bank policymaker said. Markets believe the BoJ is encouraged by stock market gains and JPY declines after Donald Trump won the white house because this could help improve sentiment and give the economy a boost.

COT Indicators

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

LFOrder Flow Trader Bullish


USDCHF Outlook – Bearish

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

Remained under pressure this week as the US dollar index hit its 14-year highs amid a 90 percent chance of a Fed rate hike in December. Australia only added merely 9.8k jobs in October, falling way shy of market forecast of a 20.3k job addition, while unemployment rate remained at 5.6 percent unchanged from previous month.

COT Indicators

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

LFOrder Flow Trader Bearish


USDCAD OutlookBearish

Strengthened against the USD as domestic manufacturing sales rose for the fourth consecutive month. The increase in Canadian manufacturing sales topped economists’ expectations for a gain of 0.1%, but a dip in volumes advised slower overall economic growth heading into the fourth quarter.

COT Indicators

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

LFOrder Flow Trader Bearish