Weekly COT Report: AUD Bulls Emerge

CFTC COT Data:

  • USD aggregated net long positions decreased a further 7.1% to $31.6 bln
  • EUR net spec shorts decreased from 197,766 to 190,127 contracts this week a reduction of 2.1%.
  • JPY short positioning jumped dramatically from 5,439 to 31,183 contract this week
  • AUD net positioning flips from short to long, as longs now 626.

EURUSD – Outlook Bearish 

Another positive week for the single currency last week which broke higher through the April high to challenge the 1.14 handle. Still benefitting from the unwinding of USD long Euro short positioning, the muted NFP number keeps EUR bulls in the driver’s seat for now. However, the EuroGroup Fin-Min meeting on Monday threatens the Euro’s trading outlook as concerns around Greece weigh once again. German & EuroZone GDP are the key data risks this week. Another strong German GDP print should support the currency but there are fears of a lower than expected number.

  • Strength active sell signal, continues to consolidate recent gains
  • Index active sell signal, ticks up
  • Momentum active buy signal, long positions in play
  • Order Flow Trader Bearish

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GBPUSD – Outlook Bearish 

Last week was another big week the UK currency which began in the shadow of uncertainty created by the looming UK election. However, the British Conservative party were returned to parliament and this was perceived as widely bullish by market participants, sending the GBP back up to April highs where it is currently stalled. BoE rate decision and Inflation report are the key data risks and the BoE members comments are especially important as this is the first time we will hear their views on the economy since the beginning of the election embargo placed on UK civil-servants. Governor Mark Carney will be speaking after the Inflation Report, which will be heavily scrutinized.

  • Strength active sell signal, ticks up
  • Index active buy signal, enter long positions
  • Momentum active buy signal, retreats from recent highs
  • Order Flow Trader Bullish

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USDJPY Outlook Bullish

A choppy week for the Japanese Yen last week which saw initial strength early in the week, but mostly conceded gains into the Friday close and is still down sharply against EUR & GBP. BoJ lowered its inflation outlook signalling the need for more stimulus which will weigh on the currency. Price remains trapped in the consolidation range just off highs.

  • Strength active buy signal, ticks backup away from convergence area
  • Index active sell signal, ticks up from lows
  • Momentum active sell signal, continues to grind higher towards convergence
  • Order Flow Trader Bearish

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USDCHF Outlook Bearish  

Although USDCHF rebounded late last week, any renewed concern on Greek politics stemming from disappointment with today’s Eurogroup meeting presents a downside risk. Sight deposit data will see some focus for indication of rising reserves.

  • Strength active sell signal, enter short positions
  • Index sell signal active, ticks back down to lows
  • Momentum sell signal active, ticks down at lows
  • Order Flow Trader Bearish

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AUDUSD Outlook Bearish 

Starts the week just off April’s high print following the Aussie’s surge on the back of an RBA rate cut of 25bps which left many players wrong-footed. Unemployment rate came in slightly higher than expected and flows remain choppy though Carry demand should continue to support AUD in the near term. China’s central bank cut its benchmark lending rates by 25 bps to 5.1% on Sunday, which should also lend support to the Australian currency by boosting the Australian export market..

  • Strength active sell signal, ticking back up to test convergence levels
  • Index active buy signal, ticking up to highs
  • Momentum active buy signal, ticking up to highs
  • Order Flow Trader Bullish

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USDCAD Outlook Bullish 

Having broken down through the range we have traded since mid-January, we are now establishing a new range with 1.1950 level acting as support. Canadian Unemployment rate came in in-line but net change in employment missed. Concerns about the Oil price induced damage to the Canadian economy persist and should see CAD lower over the medium term as USD strength resumes.

  • Strength active buy signal, ticks down to test convergence levels
  • Index active sell signal, ticks down confirming sell signal
  • Momentum sell signal, continues to tick down
  • Order Flow Trader Bearish

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