InvestMacro

On Wednesday, 14 June 2017, the Fed FOMC wrapped up a 2-day meeting. The decision to raise the federal funds rate (FFR) by 25-basis points was an important one. This marks the second rate hike of the year, signaling a dramatic change in monetary policy for the US since the global financial crisis. Currently, the Fed funds rate is 1.25%, precisely the level forecast by economists. Minutes of the Federal Open Market Committee (FOMC) will be released on 5 July 2017 at 6 PM GMT. There is now at least 1 more additional rate hike expected in 2017, and that will likely bring the interest rate to 1.50% heading into the new year.

How Strong Are US Economic Fundamentals?

The Fed has also upped its forecast for gross domestic product (GDP) growth for the year, from 2.1% in March to 2.2%. However, there is some concern about the inflation rate which continues to undershoot the Fed’s benchmark of 2%. For 2017, the PCE inflation figure is now 0.3% lower than the March projection, at 1.6%. This marks an important deviation from the strategic target set by Yellen and the FOMC. The implications of monetary policy on the USD are significant. Monetary tightening (raising interest rates) can increase demand for the USD, provided the fundamentals of the economy are sound, and growth projections are strong.

After the Fed decision to raise rates, there was no noticeable change to the USD. The dollar whipsawed briefly during the session on Wednesday, 14 June, but regained stability by the end of the day. The rather bullish sentiment expressed by Fed chair Janet Yellen helped the USD to strengthen against the JPY and the EUR. This is the fourth rate hike since 2015, and it is clear that the Fed’s prognosis of the US economy is markedly more positive. Recently, Wall Street witnessed a selloff in tech stocks and a return to banking and financials. Investors are even diversifying into lucrative digital assets like Ethereum, and other cryptocurrency options.

Key factors to long-term US economic growth

Currently, the Fed has assets of approximately $4.5 trillion under its control. This is the largest ever balance sheet held by the Fed, and Janet Yellen is eager to start unwinding the Fed’s position. This will only take place on the proviso that the economy performs as expected. Yellen expects the federal funds rate to remain below optimal levels for the short to medium-term, based on economic data such as NFP (nonfarm payrolls), unemployment rates, GDP, CPI, and to a lesser degree, soft data releases like business and consumer sentiment. If the Trump administration gets the green light to move forward with infrastructure growth and development, deregulation, a taxation overhaul, and others, this could fast-track the performance of the US economy.

The USD Remains ‘Softish’

Currently, the US dollar index is trading marginally higher at 97.55. This broad measure of the strength of the USD against 6 other currencies (JPY, EUR, GBP, CHF, CAD and ACK) has advanced by 0.35% over the past 5 days. For the year to date, the US dollar index is down 4.72%. This dovetails with the general sentiment about the US economy – lukewarm at best. The failure of Trump Trade has sparked a negative run on the USD.

Several analysts are a little perplexed about Yellen’s fixation on inflation vis-à-vis the Phillips Curve as opposed to US GDP performance. The Fed’s dual objectives of price stability and full employment are better served by focusing on gross domestic product, or a revised inflation target says Saxon Trade expert, Manny Simon. ‘We would like to see the Fed pursuing a different target. Markets tend to eschew the Fed’s perspective on inflation, perceiving the 2% objective as unobtainable over the short-term. The Phillips Curve model may not be the best way to project US inflation prospects.’

Article by Taylor Wilman

By Adinah Brown

Back in April of this year, Turkey underwent a referendum that put Recep Tayyip Erdogan into the position of President with practically unlimited powers. The changes which demolished the legislature, established the autocratic rule of the nation by one man.

An ambitious achievement, it wasn’t achieved all that easily. Firstly, Erdogan had to spend the early part of his campaigning efforts ridiculing his NATO allies with the aim of stimulating nationalist sentiment. But if the NATO summit in May demonstrated anything, it’s that ‘Operation: Charm’em” didn’t go down all that well.

In an initial meeting with France’s newly elected Emmanuel Macron, Mr Erdogan was pressured to release a French photographer who’s been held captive in a Turkish deportation center. This was then follow up by  Angela Merkel’s demand for the release of a German reporter whilst also insisting that Turkey allow German MPs to visit the Incirlik airbase, where 250 of Germany’s troops are posted. Pushing her point Ms Merkel threatened to withdraw German forces if the block is not lifted. The fact that Mr Erdogan accused Germany’s government of Nazi practices in his campaigning, undoubtedly made that conversation less than candid.

Any hopes for chumminess with America’s new administration have been dashed too. While Trump does have a tendency to get on rather well with autocratic leaders (perhaps it’s a personal aspiration?) and was the only Western leader to congratulate Erdogan on his referendum victory, conversation didn’t go down well when Erdogan came to visit this past May. Things started to go haywire when Turkish guards were caught on camera beating up Kurdish and Armenian demonstrators at the entrance of the Turkish Embassy, as a stone faced Mr Erdogan looked on. In a dressing down of the Turkish ambassador by America’s State Department, the ambassador audaciously excused the behavior by blaming Washington’s police force for failing to intervene. Then even more absurdly, America’s ambassador in Ankara was summoned by the Foreign Affairs Ministry for a whip-lashing lecture in crowd control.

And that was all before Trump and Erdogan even had the chance to start talking. Mr Erdogan wanted Trump to stop resourcing the Kurdish militia in Syria in their war against IS. The militia group known as the YPG, is recognized as a terrorist group by Ankara, but just shortly before Trump had already pledged machine guns and armored vehicles to YPG. So instead, Erdogan was assured that America would back Turkish offences against Kurdish insurgents in Turkey and northern Iraq. But even that didn’t stop Turkish forces from bombing the militia’s positions in Syria, a move that is not likely to please Trump who would like pressure taken off the YPG whilst the campaign in Syria is waging.

Then of course there is that even longer standing gripe for Mr Trump to deport Fethullah Gulen, the Pennsylvanian cleric who masterminded the attempted coup against Turkey’s government last July. But since earlier plans have fallen flat, this does not appear to be an issue that Erdogan will have the means to push any time soon.

In response to the referendum, the Turkish lira spun into a whirlpool of volatility, and appeared to be as undecided as the nation, where the referendum was won by only 51% of the vote. But the fact that such dramatic changes rested in just one referendum, which was won by a small margin, does seem to be a recipe for political and economic instability.

Despite a small recovery since the election, the Lira has weakened significantly both against the Euro and the US dollar. The fallout has meant that the Turkish Lira has become increasingly unattractive for long term speculation and in the process has prevented Turkey from joining the European Union. But that’s a prospect that no longer appears to interest Turkey, well, just Erdogan really.

EUR/TRY

USD/TRY

About the Author:

Adinah Brown is a professional writer who has worked in a wide range of industry settings, including corporate industry, government and non-government organizations. Within many of these positions, Adinah has provided skilled marketing and advertising services and is currently the Content Manager at Leverate.

By CountingPips.com – Get our weekly COT Reports by Email

Here is a short summary and this week’s links (below) to the latest Commitment of Traders changes.

– Speculators dropped US dollar bets for 4th out of last 5 weeks

– WTI crude oil speculators sharply pared bullish bets after 4 weeks of gains

– The 10-year note speculators boosted bullish bets for 1st time in 3 weeks

– Gold speculative bets pulled back after 3 weeks of strong gains

– Silver bets fell but remain over the +60,000 contract level for a third week

– Copper spec bets gained for a second week and for four out of the last five weeks

– Large S&P500 bearish bets fell for a 2nd week after reaching most bearish level since 2012 on May 30th

Forex Speculators dropped US Dollar bets to 9-month low

US Dollar net speculator positions leveled at $6.48 billion last week

The latest data for the weekly Commitment of Traders (COT) report, released by the Commodity Futures Trading Commission (CFTC) on Friday, showed that large traders and currency speculators reduced their bullish bets for the US dollar last week to the lowest point in over nine months. See full article

WTI Crude Oil Speculator bullish bets fall for 1st time in 5 weeks

The non-commercial contracts of WTI crude futures totaled a net position of 382,469 contracts, according to data from last week. This was a change of 8,714 contracts from the previous weekly total. See full article

Gold Speculators pulled back on bullish net positions after 3 weeks of gains

The large speculator contracts of gold futures advanced to a total net position of 204,465 contracts. This was a weekly change of 37,375 contracts from the previous week. See full article

10-Year Note Speculators boosted bullish net positions after 2 down weeks

The large speculator contracts of 10-year treasury note futures totaled a net position of 212,066 contracts. This was a weekly change of -46,099 contracts from the previous week. See full article

S&P500 Speculators raised net positions for 2nd week

The large speculator contracts of S&P 500 futures totaled a net position of -7,343 contracts. This was a change of 742 contracts from the reported data of the previous week. See full article

Silver Speculators cut back on net bullish positions for 1st time in 4 weeks

The non-commercial contracts of silver futures totaled a net position of 65,941 contracts, according to data from last week. This was a weekly change of 4,527 contracts from the previous totals. See full article

Copper Speculators lifted bullish net positions for 2nd week

The large speculator contracts of copper futures totaled a net position of 12,726 contracts. This was a weekly change of 3,082 contracts from the data of the previous week. See full article

Article by CountingPips.com

The Commitment of Traders report data is published in raw form every Friday by the Commodity Futures Trading Commission (CFTC) and shows the futures positions of market participants as of the previous Tuesday (data is reported 3 days behind).

To learn more about this data please visit the CFTC website at http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm

By CountingPips.com – Get our weekly COT Reports by Email

US Dollar net speculator positions fell to $6.48 billion last week

The latest data for the weekly Commitment of Traders (COT) report, released by the Commodity Futures Trading Commission (CFTC) on Friday, showed that large traders and currency speculators reduced their bullish bets for the US dollar last week to the lowest point in over nine months.

Non-commercial large futures traders, including hedge funds and large speculators, had an overall US dollar long position totaling $6.48 billion as of Tuesday June 13th, according to the latest data from the CFTC and dollar amount calculations by Reuters. This was a weekly decrease of $-1.52 billion from the $8.00 billion total long position that was registered the previous week, according to the Reuters calculation (totals of the US dollar contracts against the combined contracts of the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc).

The aggregate speculator positions have fallen four out of the past five weeks and have now declined to the lowest level since August 30th 2016 when bets equaled $5.29 billion.

The last time the aggregate dollar position fell into negative territory was May 17th 2016 with a $-4.19 billion position.

Weekly Speculator Contract Changes:

The major currencies that improved against the US dollar last week were the euro (5,044 weekly change in contracts), Japanese yen (4,474 contracts), Swiss franc (2,095 contracts), Canadian dollar (5,906 contracts), New Zealand dollar (3,380 contracts) and the Mexican peso (10,993 contracts).

The currencies whose speculative bets declined last week versus the dollar were the British pound sterling (-2,725 weekly change in contracts) and the Australian dollar (-1,397 contracts).

Table of Weekly Commercial Traders and Speculators Levels & Changes:

 

This latest COT data is through Tuesday and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the dollar will gain versus the euro.

 

Weekly Charts: Large Trader Weekly Positions vs Price

EuroFX:

British Pound Sterling:

Japanese Yen:

Swiss Franc:

Canadian Dollar:

Australian Dollar:

New Zealand Dollar:

Mexican Peso:

*COT Report: The weekly commitment of traders report summarizes the total trader positions for open contracts in the futures trading markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

The Commitment of Traders report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions data that was reported as of the previous Tuesday (3 days behind).

Each currency contract is a quote for that currency directly against the U.S. dollar, a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and a net long position expect that currency to rise versus the dollar.

(The charts overlay the forex closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.) See more information and explanation on the weekly COT report from the CFTC website.

Article by CountingPips.com

By CountingPips.com – Receive our weekly COT Reports by Email

WTI Crude Oil Non-Commercial Speculator Positions:

Large speculators sharply cut back on their bullish net positions in the WTI Crude Oil futures markets this week following gains in the previous four weeks, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of WTI Crude Oil futures, traded by large speculators and hedge funds, totaled a net position of 358,999 contracts in the data reported through Tuesday June 13th. This was a weekly reduction of -23,470 contracts from the previous week which had a total of 382,469 net contracts.

Speculative positions had risen by over +53,000 total net contracts in the previous four weeks before this week’s pull back. The weekly decline has pushed the spec level to the lowest position since May 16th.

WTI Crude Oil Commercial Positions:

The commercial traders position, categorized by the CFTC as hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -376,005 contracts on the week. This was a weekly boost of 14,814 contracts from the total net of -390,819 contracts reported the previous week.

USO:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the USO Crude Oil ETF, which tracks the price of WTI crude oil, closed at approximately $9.60 which was a decline of $-0.37 from the previous close of $9.97, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article by CountingPips.com – Weekly COT Report

By CountingPips.com – Receive our weekly COT Reports by Email

Gold Non-Commercial Speculator Positions:

Large speculators reduced their bullish net positions in the Gold futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Gold futures, traded by large speculators and hedge funds, totaled a net position of 190,274 contracts in the data reported through Tuesday June 13th. This was a weekly decrease of -14,191 contracts from the previous week which had a total of 204,465 net contracts.

The gold speculative positions had risen sharply over the previous three weeks (by over +75,000 contracts) before this week’s pullback. Despite the weekly decline, overall gold bullish spec positions are still at their second highest level of the past seven weeks.

Gold Commercial Positions:

The commercial traders position, categorized by the CFTC as hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -203,611 contracts on the week. This was a weekly boost of 12,743 contracts from the total net of -216,354 contracts reported the previous week.

GLD ETF:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the GLD ETF, which tracks the price of gold, closed at approximately $120.48 which was a decline of $-2.62 from the previous close of $123.10, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article by CountingPips.com – Weekly COT Report

By CountingPips.com – Receive our weekly COT Reports by Email

10-Year Note Non-Commercial Speculator Positions:

Large speculators boosted their bullish net positions in the 10-Year Note futures markets this week to the highest level in four weeks, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of 10-Year Note futures, traded by large speculators and hedge funds, totaled a net position of 273,969 contracts in the data reported through Tuesday June 13th. This was a weekly rise of 61,903 contracts from the previous week which had a total of 212,066 net contracts.

Speculative bets rebounded this week after falling by over -150,000 net contracts in the previous two weeks and are now at the highest level since May 23rd when net positions totaled +362,501 contracts.

10-Year Note Commercial Positions:

The commercial traders position, categorized by the CFTC as hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -116,293 contracts on the week. This was a weekly decrease of -56,319 contracts from the total net of -59,974 contracts reported the previous week.

IEF ETF:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the 7-10 Year Treasury Bond ETF (IEF) closed at approximately $107.28 which was a fall of $-0.45 from the previous close of $107.73, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article by CountingPips.com – Weekly COT Report

By CountingPips.com – Receive our weekly COT Reports by Email

S&P500 Non-Commercial Speculator Positions:

Large speculators raised their net positions in the S&P500 futures markets this week to a less bearish level for a second week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of S&P500 futures, traded by large speculators and hedge funds, totaled a net position of -5,466 contracts in the data reported through Tuesday June 13th. This was a weekly increase of 1,877 contracts from the previous week which had a total of -7,343 net contracts.

Bearish speculative positions have now fallen for a second week after reaching the most bearish level since 2012 on May 30th.

S&P500 Commercial Positions:

The commercial traders position, categorized by the CFTC as hedgers or traders engaged in buying and selling for business purposes, totaled a net position of 259 contracts on the week. This was a weekly shortfall of -11,635 contracts from the total net of 11,894 contracts reported the previous week.

SPY ETF:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the SPY ETF, which tracks the price of S&P500 Index, closed at approximately $244.55 which was a rise of $1.34 from the previous close of $243.21, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article by CountingPips.com – Weekly COT Report

By CountingPips.com – Receive our weekly COT Reports by Email

Silver Non-Commercial Speculator Positions:

Large speculators reduced their net bullish positions in the Silver futures markets this week following three weeks of gains, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Silver futures, traded by large speculators and hedge funds, totaled a net position of 60,658 contracts in the data reported through Tuesday June 13th. This was a weekly lowering of -5,283 contracts from the previous week which had a total of 65,941 net contracts.

Silver speculative positions, despite the weekly decline, remain over the +60,000 contract level for a third week.

Silver Commercial Positions:

The commercial traders position, categorized by the CFTC as hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -71,913 contracts on the week. This was a weekly increase of 3,711 contracts from the total net of -75,624 contracts reported the previous week.

SLV ETF:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the SLV ishares ETF, which tracks the price of silver, closed at approximately $15.95 which was a shortfall of $-0.81 from the previous close of $16.76, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article by CountingPips.com – Weekly COT Report

By CountingPips.com – Receive our weekly COT Reports by Email

Copper Non-Commercial Speculator Positions:

Large speculators raised their net positions in the Copper futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Copper futures, traded by large speculators and hedge funds, totaled a net position of 18,798 contracts in the data reported through Tuesday June 13th. This was a weekly boost of 6,072 contracts from the previous week which had a total of 12,726 net contracts.

Copper speculative positions have gained for a second week and for four out of the last five weeks. Net bullish positions are above the +10,000 contract level for a second week after falling below this threshold on May 30th.

Copper Commercial Positions:

The commercial traders position, categorized by the CFTC as hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -20,597 contracts on the week. This was a weekly decrease of -7,271 contracts from the total net of -13,326 contracts reported the previous week.

JJC ETF:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the JJC iPath Bloomber Copper ETN, which tracks the price of copper, closed at approximately $29.49 which was an advance of $0.62 from the previous close of $28.87, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article by CountingPips.com – Weekly COT Report