Analys från DailyFX
COT: Gold Prices Entice Large Speculators, Australian & Canadian Dollar Longs Grow
What’s inside:
- Canadian dollar large speculators continue to build long after unwinding from record short
- Australian dollar large specs increase net-long position for 6th week in a row as it breaks range
- Gold longs increase for first time since June from a low level, may set up for a break of 2011 trend-line at some point
Check out the Q3 Forecasts for our outlook on currencies, commodities, and equity indices.
Every Friday the CFTC releases the Commitment of Traders (COT) report, which shows futures traders’ positioning as it stands for the week ending on Tuesday. In the table below are the net positions of large speculators (i.e. hedge funds, CTAs, etc.); the change in their positioning from the prior week and where the net position stands compared to its 52-week range.
Noteworthy developments
Gold – Large specs in gold futures have primarily been sellers in the past three months, bringing their net-long position down to the low-end of the range over the past 10-yr+ period. The most recent report showed an increase in longs for the first time since early June. The precious metal is trading around the widely-watched 2011 trend-line, and on that with positioning relatively small compared to other times in recent years, we could finally see a drive higher above the bull/bear line-in-the-sand. A strong weekly close above the trend-line and move beyond the June high at 1296 will be our cue to look for a broader rally to develop. But the key will be for gold to clearly exceed these hurdles before becoming overly bullish.
Gold: Weekly
Canadian dollar – As CAD continues to steam-roll on ahead, so does the unwind from a record short position held by large speculators to a long position. At the time (in May), we noted that the extreme positioning profile set the Canadian dollar up for a rally. It’s been an aggressive rally, and with USDCAD nearing a trend-line extending back to September 2012 the unwind from short to a net long position in CAD may soon be put in reverse should we see the long-term threshold support the US dollar versus the Canadian currency.
Australian dollar – Large speculators in AUD have increased their net long for a 6th week in a row, bringing the total number of contracts held (56k) to just shy of the largest position since April of last year (59k). A build-up of longs from here beyond 59k would take net longs to the largest position in over four years. Positioning in the past year+ has been volatile as the Australian dollar was in search of a direction from its trading range. Now that it is broken free perhaps more upside will follow along with an increase in the number of trend-followers also jumping onboard the trend.
The COT report is a longer-term sentiment indicator – for a short-term view on sentiment, check out IG Client Sentiment data.
Other futures contracts and large speculator positioning:
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—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email by signing up here.
You can follow Paul on Twitter at @PaulRobinonFX.
What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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