US dollar

Outlook
Bullish
DAILY UPDATEThe US dollar is currently slightly lower against all major currencies except the Japanese yen. Yesterday, the buck moved up sharply for the second session in a row. Beyond the move higher, note that trading volumes in US dollar index futures accelerated compared to the previous session and relative to 30-day averages. This is a sign that traders bought the dollar with conviction. Today's US dollar index trading range is 94.30 - 96.60.  Following a significant move higher in the last two sessions, the buck is currently taking a breather. As risk sentiment continues to deteriorate, the dollar appears to have found buyers seeking safety. Yesterday, US equity markets resumed weakening, wi...

Euro

Outlook
Bearish
DAILY UPDATEThe euro is currently recovering against the US dollar, Japanese yen and Canadian dollar, while selling off against the Australian dollar. Yesterday, the euro sold off sharply against the US dollar. Notably, trading volumes in euro futures accelerated for the third session in a row. The combination of yesterday's weakness and rising volumes suggests that traders are selling the currency with conviction. Today's EUR/USD trading range is 1.1430 - 1.1860.  Following news that the European Commission called Italy's draft budget an "unprecedented" breach of Eurozone fiscal rules, the euro weakened sharply yesterday. According to a  Reuters report, the Commission stated that Italian governme...

British pound

Outlook
Bearish
DAILY UPDATEThe British pound is currently slightly higher against all major currencies except the euro and the Australian dollar. Yesterday, the pound ended the day down sharply against the US dollar. Yesterday's sell-off was accompanied by accelerating trading volumes in British pound futures, which were higher relative to both the previous session and 30-day averages. The combination of a sharp move lower and higher volumes suggest that traders sold the currency with conviction. Today's GBP/USD trading range is 1.2920 - 1.3260.  Thanks to a combination of slowing retail sales data, concerning Brexit headlines and pressure on the euro, the pound had plenty of reasons to weaken yesterday. Startin...

Japanese yen

Outlook
Neutral
DAILY UPDATEThe Japanese yen is currently weakening against all major currencies. Yesterday, the yen moved up sharply against the US dollar. Notably, trading volumes in yen futures accelerated for the third session in a row, rising above 30-day averages. The combination of continued strength in the yen and accelerating volumes suggest that traders bought the yen with conviction. Today's USD/JPY trading range is 111.50 - 114.50.  As riskier assets such as equities and commodities rebound today, the yen appears to be weakening accordingly. Following a significant move higher in Chinese equity markets this morning, most US equity indices and commodities are strengthening. The S&P 500 is currently...

Australian dollar

Outlook
Bearish
DAILY UPDATEThe Australian dollar is currently strengthening against all major currencies. The aussie is up the most against the Canadian dollar today. Yesterday, the Australian dollar ended the day slightly lower against the US dollar. Notably, trading volumes in Australian dollar futures accelerated for the fourth session in a row, rising above 30-day averages. While rising volumes are usually notable, this was not the case yesterday as prices only moved by a small degree. Today's AUD/USD trading range remains 0.7080 - 0.7350.  While yesterday's employment changes slowed relative to the previous month (and fell below consensus expectations), foreign exchange traders appeared to be more focused o...

Canadian dollar

Outlook
Bearish
DAILY UPDATEThe Canadian dollar is currently selling off against all major currencies except the Japanese yen. Yesterday, the loonie ended the day sharply lower against the US dollar. For the third session in a row, trading volumes in Canadian dollar futures accelerated relative to the previous session. The combination of recent weakness and rising volumes suggests that traders are selling the loonie with conviction. Today's USD/CAD trading range is 1.2770 - 1.3120.  Following a significant slowdown in year-over-year inflation, the Canadian dollar sold off sharply earlier today. Looking at the figures, headline inflation in September slowed to 2.2%, versus 2.8% in August. Consensus estimates had a...

Gold

Outlook
Neutral
DAILY UPDATEGold prices are currently slightly higher. Yesterday, the precious metal ended the day slightly higher. Following a sharp move up last Thursday (which was also accompanied by significant trading volumes), trading volumes in gold futures have been relatively light this week. Specifically, yesterday's volumes were below 30-day averages. Weak volumes suggest that gold traders are not trading with conviction. Today's gold trading range is $1,181 - $1,233.  While the US dollar index (a measure of the currency against its largest peers) is currently lower, gold appears to be held in check by rising US Treasury bond yields today. As we have written in the past, day-to-day trading in the preci...

Crude oil

Outlook
Neutral
DAILY UPDATECrude oil prices are currently recovering. Both WTI and Brent crude oil are currently moving higher. Yesterday, both benchmarks fell sharply following a significant deterioration of risk sentiment across financial markets. While trading volumes in WTI futures decelerated relative to the previous session, note that Brent futures volumes were both higher than the previous session and relative to 30-day averages. This suggests that traders sold Brent with conviction yesterday (but the same cannot be said for WTI). Today's WTI trading range is $67.40 - $75.80.  Looking at recent fundamental developments, Chinese demand for crude oil appears to be stable despite slowing growth in the world'...

Looking at this week’s Commitments of Traders Report, changes in speculator positioning across major currencies and commodities are limited. The only changes worth highlighting can be seen in Canadian dollar and gold positions. Following the successful conclusion of USMCA (formerly NAFTA) negotiations, speculators reduced their short positions against the Canadian dollar by a significant degree. …

Published 

Looking at this week’s Commitments of Traders Report, changes in speculator positioning are limited. For the fourth week in a row, speculators trimmed their net short position in the Swiss franc while adding to their short positions in the Japanese yen. While the two safe haven currencies typically move in the same direction, the Swiss franc has been strengthening in response to slowing European …

Published 

In our last commentary on the euro in late August, we wrote that the common currency was set to weaken further thanks to (1) slowing growth, (2) slowing inflation and (3) an outsized speculator long position in euro futures and options. Following the publication of our last commentary, EUR/USD has weakened from 1.1730 – 1.180 (the top-end of its trading range that we update daily on our...

Published 
Tags: Euro

In our previous commentary on the US dollar, we wrote that the buck was set to rise further thanks to our forecast for slowing US growth and inflation. Given the US dollar’s safe haven qualities, the currency performs the best when economic conditions deteriorate. Following the publication of our last commentary, the performance of the US dollar index (a measure of the currency against major pee…

Published 
Tags: US dollar

In this week’s Commitments of Traders Report, there are several significant changes in speculator positioning across major currencies and commodities. For the second week in a row, speculators made significant adjustments to their positions in the Swiss franc, Japanese yen, and the British pound. The biggest change this week (as a proportion of open interest) can be seen in Canadian...

Published 

Looking at this week’s Commitments of Traders Report, there are many significant changes in speculator positioning across major currencies and commodities. For the second week in a row, speculators reduced their net short positions in the Swiss franc. On the other hand, speculators increased their bearish bets against the Japanese yen and the British pound this week. Lastly, speculators increased…

Published 

Looking at this week’s Commitments of Traders Report, there are few notable changes in speculator positioning. The only move worth highlighting can be seen in Swiss franc net positions. For the second week in a row, speculators cut back on their short franc positions. As we wrote two weeks ago, the Swiss franc entered a bullish trend against the US dollar and is likely to keep strengthening for t…

Published 

Looking at this week’s Commitments of Traders Report, there are very few notable changes in speculator positioning. The biggest change can be seen in Swiss franc net positions. After the franc entered a bullish trend (a topic we covered last week), net short positions in the currency are down significantly this week. Short euro, short Swiss franc and long US dollar (based on our implied measure …

Published 

In this week’s Commitments of Traders Report, notable changes in speculator positions in major currencies and commodities are fairly limited. The most substantial changes can be seen in the British pound and the Swiss franc. Speculators significantly increased their bets against the British pound, while reducing their bets against the Swiss franc this week. Looking at extremes in positioning, sh…

Published 

In our last take on the euro in April, we wrote that the bullish case for the currency was running out of drivers. Specifically, we wrote that decelerating Eurozone growth (in rate-of-change terms), changes in trading patterns and overly bullish speculator sentiment was likely to weigh on the euro in the future. At the time, EUR/USD was trading around 1.23, near its 2018 high just above 1.2550. 

Published 
Tags: Euro

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