Large oil speculators pulled back on their bullish net positions in the WTI crude oil futures markets last week after recording a record high level the week prior, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.
The non-commercial contracts of WTI crude futures, traded by large speculators and hedge funds, totaled a net position of 525,254 contracts in the data reported through February 28th. This was a weekly decline of -31,353 contracts from the previous week which had a total of 556,607 net contracts.
Speculators had sharply added to their net positions the previous two weeks and brought positions to a record high of 556,607 net contracts before last week’s decline. Net bullish speculative positions are still above the +500,000 contracts level for a third straight week.
WTI Crude Oil Commercial Positions:
Meanwhile, the commercial traders position, categorized by the CFTC as hedgers or large traders engaged in buying and selling for business purposes, totaled a net bearish position of -546,016 contracts last week. This was a weekly change of 25,769 contracts from the total net of -571,785 contracts reported the previous week.
USO Crude Oil ETF:
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 $11.45 which was a dip of $-0.09 from the previous close of $11.54, according to ETF market data.
*COT Report: The COT data, released weekly to the public each Friday, is updated through the previous 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).
Large speculators and traders sharply increased their net positions in the gold futures markets last week for a second straight 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 Comex gold futures, traded by large speculators and hedge funds, totaled a net position of 163,798 contracts in the data reported through February 28th. This was a weekly change of 40,035 contracts from the previous week which had a total of 123,763 net contracts.
Gold speculative positions are now at their highest level in over three months and jumped last week by the most since June 14th when net positions rose by 51,243 contracts that week.
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 -179,907 contracts last week. This is a weekly change of -40,343 contracts from the total net of -139,564 contracts reported the previous week.
Gold ETF:
Over the same weekly reporting time-frame, from Tuesday to Tuesday, the GLD ETF, which tracks the price of gold, closed at approximately $119.23 which was a gain of $1.48 from the previous close of $117.75, according to ETF financial market data.
*COT Report: The COT data, released weekly to the public each Friday, is updated through the previous 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).
Large speculators and traders sharply raised their net bearish positions in the 10-year treasury note futures markets last week to a new record high position, 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 treasury note futures, traded by large speculators and hedge funds, totaled a net position of -409,659 contracts in the data reported through February 28th. This was a weekly change of -107,360 contracts from the previous week which had a total of -302,299 net contracts.
Speculative net bearish positions have now eclipsed their previous record of -394,689 contracts recorded on January 10th.
10 Year Treasury 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 bullish position of 594,711 contracts last week. This is a weekly rise of 75,730 contracts from the total net of 518,981 contracts reported the previous week.
IEF 7-10 Year Bond ETF:
Over the same weekly reporting time-frame, from Tuesday to Tuesday, the 7-10 Year Treasury Bond ETF (IEF) closed at approximately $105.65 which was a gain of $0.51 from the previous close of $105.14, according to ETF market data.
*COT Report: The COT data, released weekly to the public each Friday, is updated through the previous 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).
Large speculators and traders slightly increased their bullish net positions in the S&P500 stock futures markets last 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 2,972 contracts in the data reported through February 28th. This was a weekly rise of 687 contracts from the previous week which had a total of 2,285 net contracts.
Speculators have now added to their small bullish position for a third week after registering a small bearish net position on February 7th.
S&P500 Commercial Positions:
Meanwhile, 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 -976 contracts last week. This is a weekly rise of 8,540 contracts from the total net of -9,516 contracts reported the previous week.
S&P500 Stock Market Index:
Over the same weekly reporting time-frame, from Tuesday to Tuesday, the S&P500 index closed at approximately 2363.63 which was a dip of -1.74 from the previous close of 2365.37, according to market data.
*COT Report: The COT data, released weekly to the public each Friday, is updated through the previous 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).
Large speculators and traders reduced their bullish net positions in the copper futures markets last week for a fourth consecutive 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 37,998 contracts in the data reported through February 28th. This was a weekly decline of -4,796 contracts from the previous week which had a total of 42,794 net contracts.
Copper speculators have now pulled back on their net bullish positions to the lowest level since November 1st when net positions totaled just 11,298 contracts.
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 bearish position of -42,726 contracts last week. This was a weekly change of 5,192 contracts from the total net of -47,918 contracts reported the previous week.
Copper ETN:
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 $31.22 which was a dip of $-0.46 from the previous close of $31.68, according to financial market data.
*COT Report: The COT data, released weekly to the public each Friday, is updated through the previous 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).
Large speculators and traders added to their bullish net positions in the silver futures markets last week for the ninth consecutive 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 Comex silver futures, traded by large speculators and hedge funds, totaled a net position of 95,423 contracts in the data reported through February 28th. This was a weekly gain of 7,406 contracts from the previous week which had a total of 88,017 net contracts.
Silver speculative positions are now at their highest level since July 26th when net positions totaled +96,077 contracts.
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 bearish position of -108,010 contracts last week. This is a weekly change of -5,777 contracts from the total net of -102,233 contracts reported the previous week.
Silver 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 $17.37 which was a rise of $0.34 from the previous close of $17.03, according to ETF financial market data.
*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).
Japan’s core consumer price index rose 0.1% in January from a year earlier, marking the first year-on-year rise since December 2015.
The reading for the core CPI, which includes oil products but excludes volatile prices of fresh food, was above the median market forecast for flat growth.
A separate, new index that excludes the effect of energy and fresh food prices, but includes processed food costs, rose 0.2% in January from a year earlier. The ministry says the index, released for the first time on Friday, is useful in tracking price trends because it strips away one-off factors. It will continue to release on its website the “core-core” CPI, which excludes energy and food prices.
Japan’s jobless rate fell to 3.0% in January and the availability of jobs was unchanged from the previous month.
Japanese household spending fell 1.2% in January from a year earlier in price-adjusted real terms, government data showed on Friday, compared with the median estimate for a 0.4% decline.
Japan’s services PMI slipped to a seasonally adjusted 51.3 in February from 51.9 in January. February’s index for new business was 53.0, barely changed from January’s 53.1. Last month was the seventh straight with growth in new orders. The index for outstanding business slipped to 50.2 in February from 51.3 the previous month. Employment in the sector, which declined most of 2016’s second half, rose at the fastest rate since May 2013, according to the survey. January also brought more service jobs, but the increase was at a slower pace.
The USD slipped against the JPY on Friday but remained on track for a solid weekly gain on growing expectations the U.S. Federal Reserve will raise interest rates at its mid-March meeting.
Comments this week from Fed policymakers – William Dudley, Lael Brainard and John Williams – suggest that Fed hike in two weeks is the most likely scenario now. Fed funds futures on Thursday implied traders saw a 79.7% probability of a Fed rate hike at its March 14-15 policy meeting, up from 66.4% on Wednesday. We think this probability will rise after speeches by Fed Chair Janet Yellen as well as Vice Chair Stanley Fischer today.
Technical analysis
The USD/JPY broke above 76.4% fibo of February drop at 114.18 on rising expectations for Fed hike in March. We think there is scope for full retracement of February move in the near term (114.95). The next resistance level would be January 27 high at 115.37.
Trading strategy
We stay sideways on the USD/JPY, because we do not want to increase risk on our portfolio with another USD-bullish position after getting short on the EUR/USD and getting long on the USD/CHF. This-year price action suggests that the USD/JPY has been relatively reluctant to USD strength. That is why we think the USD is likely to gain more against other major pairs.
USD/CAD: Investors shrugged off Canadian GDP data
Macroeconomic overview
The Canadian dollar weakened on Thursday to a nearly two-month low against the USD, shrugging off data that showed solid domestic economic growth as oil prices fell and the greenback climbed against a basket of major currencies. Gains for the U.S. dollar came on increasing signs from Federal Reserve officials that the U.S. central bank is seriously considering raising interest rates this month.
Canada’s economy grew at a faster pace than anticipated in the final quarter of 2016, lifted by consumer spending and a drop in imports, but the strong performance is not expected to prod the central bank to change its cautious stance on interest rates.
GDP grew at an annualized 2.6% rate in the fourth quarter, Statistics Canada said on Thursday, beating market forecasts for 2% growth.
While that marked a slowdown from an upwardly revised 3.8% rate of expansion in the third quarter, the economy grew by 0.3% in December, boding well for the transition into 2017.
Other aspects of Canada’s economic health were not as strong as the overall growth figure suggested, with an increase in net trade contributing to growth. Although exports rose just 1.3% on an annualized basis, imports slumped, giving back temporary third-quarter gains due to a shipment for an East Coast oil project.
The pullback also weighed on business investment. However, consumers continued to show resiliency as household consumption climbed 2.6%.
Technical analysis
The USD/CAD has risen steeply and a pullback would be a likely scenario for the next week. However, hawkish comments from Janet Yellen today may push the rate towards December 2016 high at 1.3598.
Trading strategy
Our long-term position is under pressure after the USD/CAD broke above January high of 1.3387. We have placed a short-term sell order at 1.3595 as we do not expect the USD/CAD rally to be continued above that level given tailwind for the loonie coming from fundamental factors.
The H4 chart of EUR USD shows the downtrend. Bullish Doji pattern indicates an ascending correction. Three Line Break chart shows a bearish direction; Heiken Ashi candlesticks confirm a bullish pullback.
At the H1 chart of EUR USD, bullish Hammer and Three Methods patterns indicate an ascending movement. Three Line Break chart and Heiken Ashi candlesticks confirm a bullish pullback.
USD JPY, “US Dollar vs. Japanese Yen”
At the H4 chart of USD JPY, bearish High Wave pattern indicated a descending correction. Three Line Break chart shows a bullish direction; Heiken Ashi candlesticks confirm a bearish pullback. The upside Window is a resistance level.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
The euro rate closed down on Thursday. Hawkish comments from Fed members and the growth of US 10-year bond yields continue to act as a support for the dollar. They’re readying the market for a rate hike during the Fed’s meeting this month, at least as traders see it.
According to the latest data from CME Group’s FedWatch Tool, the probability of a rate hike in March has gone up from 66.4% to 75.3%, in May from 71.4% to 79%, and in June from 84.6% to 89.6%.
On Thursday, US 10-year bond yields grew by 1.14% to 2.486% (up 0.97% on 02/03/17). The EUR/USD exchange rate fell somewhat reluctantly as the growth in US bond yields was met with similar growth from their German counterparts. Buyers tried several times to induce some upwards movement from 1.0500, and only on the third attempt did they manage to break through the trend line.
Market expectations:
At the time of writing, the euro is selling at 1.0517. The rate bounced from 1.0495, but for this rebound to gather momentum, we must see the hourly candle close above 1.0530. If US 10-year bond yields rise above 2.50%, then perhaps we can expect the euro to fall to 1.0469 or lower. This will depend on the tone of the comments to be given today by Fed members Charles Evans, Jeffery Lacker, Stanley Fischer, Jerome Powell and Janet Yellen.
If US bonds stay under 2.50%, then the dollar will most likely undergo a correction and the euro will strengthen to 1.0540 towards the end of the day.
My expectations of an upwards correction on Wednesday didn’t come to fruition. Just as yesterday, the situation remains unclear. Cycles and price patterns from recent years are suggestive of a flat with an upwards bias. After unsuccessfully attempting to break through the trend line at 1.0545, the euro fell to 1.0495. In Asia, the euro is trading at 1.0519. The price bounced off the 67th degree and broke through the trend line on the hourly timeframe. As I’ve stated above, the situation is unclear to me and so my predictions should be taken with a pinch of salt.
Yesterday, the probability of a rate hike this month rose from 66.4% to 75.3%. Janet Yellen, among other Fed members, is due to speak today, but they’re unlikely to have any surprises in store.
The 67th degree coincides with the minimum from 22/02/17. If US 10-year bond yields stay below 2.50%, then the dollar will likely undergo a correction and the euro will appreciate to 1.0540 by the end of the day. This scenario will only play out, though, if the hour closes above 1.0458. Keep an eye on US and German bonds, as these will be the main drivers for our currency pair in the wake of the Fed’s meeting.
Positives for the euro (+):
Fundamental:
(+) US president Donald Trump favours a weaker dollar;
(+) The threshold for acceptable US government debt of 20.1 trillion USD may be reached by March this year. This will create headaches for new US president Donald Trump. A new law on the debt ceiling will come into force on the 16th of March 2017;
(+) Greece may need less money than the IMF had planned for;
(+) François Bayrou, leader of the “Democratic Movement” party, has ruled out running for the presidency and thrown his weight behind independent candidate Emmanuel Macron;
(+) Marine Le Pen has had her EU parliamentary immunity from prosecution lifted for political reasons;
Technical (short-term):
(+) According to data for 21/02/17, small time speculators on the Chicago Exchange have increased their long positions by 1,687 contracts and reduced short positions by 2,888 contracts;
(+) EURGBP: On the daily timeframe, the cross is in a phase of growth. The target is 0.86, from which the euro is expected to weaken;
(+) EURUSD: On the daily timeframe, between the Stochastic indicator and CCI, some bullish divergences have formed. The rate has rebounded from the minimum on 22/02/17;
(+) EURUSD: The monthly Stochastic indicator (5,3,3) is moving upwards;
(+) German 10-year bond yields: 0.317% (up 12.41% for 03/03/17). In Asia, US 10-year bond yields fell by 0.37% to 2.480%;
Negatives for the euro (-):
Fundamental:
(-) The ECB has no plans to curtail its QE program. According to the minutes of the latest meeting, most members of the Governing Council don’t believe it necessary to reduce the amount of stimulus (long-term impact);
(-) According to CME Group FedWatch Tool, the probability of a rate hike in March has grown from 66.4% to 75.3%, in May from 71.4% to 79.0%, and in June from 84.6% to 89.6%;
(-) Head of the Philadelphia Fed, Patrick Harker, believes that a rate hike in March is possible;
(-) Dallas Fed president says it’s better to raise rates sooner rather than later;
(-) John Williams, head of the San Francisco Fed, says that FOMC members will give serious consideration to a rate hike this month;
(-) Political risks in Europe are growing (French elections and Brexit);
(-) Greece is unable to reach a deal with its creditors for financial assistance;
Technical factors (short-term):
(-) According to data for 21/02/17, short and long positions from large speculators have increased on the Chicago exchange. Long positions have grown by 4,953 contracts to 132,216, while short positions have gone up by 12,556 contracts to 183,011. Net short positions have grown from 39,144 contracts to 50,779;
(-) US 10-year bond yields: 2.486% (up 1% from 02/03/17);
(-) EURUSD: the daily Stochastic (5,3,3) and CCI indicators are moving downwards;
(-) EURUSD: the weekly Stochastic indicators (5,3,3), AO and AC are moving downwards;
(-) Long/short ratio as of 7:51 EET: 21%/78%, lots: 7309/26242 (previous day: 7006/20361), positions: 24247/61257 (previous day: 21885/48070).
The EUR/USD pair has reached its downside target. Possibly, today the price may continue falling to reach 1.0472. After that, the instrument may be corrected towards 1.0550.
GBP USD, “Great Britain Pound vs US Dollar”
The GBP/USD pair is still falling inside the third wave towards the target at 1.2200. Possibly, right now the price is forming another consolidation range. If later the instrument breaks this range to the upside; the market may test 1.2377 from below and then continue falling to reach the above-mentioned target; if to the downside – reach the local target at then start a new correction towards 1.2377.
USD CHF, “US Dollar vs Swiss Franc”
The USD/CHF pair is trading to break the top of the ascending wave. Possibly, today the price may test 1.0115 from above and then grow with the target at 1.0168. Later, in our opinion, the market may be corrected towards 1.0010.
USD JPY, “US Dollar vs Japanese Yen”
The USD/JPY pair is forming the fifth wave with the target at 115.30. Possibly, today the price may test 114.00 from above and then grow to reach 115.30. After that, the instrument may reverse and start falling towards 111.10.
AUD USD, “Australian Dollar vs US Dollar”
The AUD/USD pair has reached its predicted target. Possibly, today the price may be corrected towards 0.7605 to test it from below. Later, in our opinion, the market may fall with the target at 0.7474.
USD RUB, “US Dollar vs Russian Ruble”
The USD/RUB pair has reached the target of the first ascending wave. Possibly, today the price may form another consolidation range. After breaking this range to the downside, the instrument may be corrected towards 57.64.
XAU USD, “Gold vs US Dollar”
Gold has reached the target of the descending wave. Possibly, today the price may consolidate. After breaking this range upwards, the instrument may be corrected with the target at 1247.50.
BRENT
Brent has reached its downside target. Possibly, today the price may form another consolidation range. Later, in our opinion, the market is expected to break the range to the upside and reach 56.35. After that, the instrument may start another descending movement with the target at 54.00.
Attention! Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.
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