Emerging Caution Despite Continued Strength

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

The below summary highlights futures positions and changes made by hedge funds across commodities, forex, bonds and stock indices up until last Tuesday, February 23. A week that saw emerging unease about the continued rise in bond yields that culminated last Thursday, two days after data for this report was compiled. Before then, the S&P 500 dropped 1.3% while the technology heavy Nasdaq slumped by 4.2%. The commodity sector managed another rise to a fresh 34-month high while the dollar traded softer before an end of week spike on emerging risk aversity.

Commodities

Ahead of the bond market turmoil last week, hedge funds had turned a bit more cautious on commodities. Despite seeing the Bloomberg Commodity index climb to a fresh 34-month high, the report shows that leveraged funds cut exposure to energy and metals. Overall however, the combined net long across 24 major commodity futures was unchanged at a record 2.7 million lots, representing a nominal value of $144.4 billion. This due to continued demand across the agriculture sector where the combined net long reached a fresh record at 1.3 million lots. The buying was led by sugar, coffee and soybeans on weather worries in Brazil.

Most noticeable change considering the continued rally was in HG copper where speculators, despite seeing the metal rally 9%, cut their exposure by 19% to a 20-week low.

Energy:

Emerging risk aversity despite strong price action was seen across the energy sector where all but one saw small net reductions. The combined crude oil long was reduced by 1.7k lots from a 2-1/2-year high to 736k lots.

Metals:

Speculators reduced bullish copper bets while the price continued to surge higher to reach the highest level since 2011. The 19% reduction in the net-long to a 20-week low was primarily driven by longs being reduced with no sign of fresh short selling. Gold held steady at 83k lots, a 21-month low while both silver and platinum saw reductions.

Agriculture:

The combined long across the six grain and oilseed contracts rose by 10k lots to 796k lots, a seven-week high. Biggest moves in soybeans (+11k), wheat (+6k) and corn (-5k). All the four softs contracts saw strong buying led by sugar by sugar (+21k lots to 219k), Arabica coffee (+14k to 35k, a 22-week high), cocoa (+1k to 16k) and cotton (+4k to 72.4k and highest since August 2018).

Forex

In FX, speculative flows were very modest for a second week as dollar stayed range-bound before its end of week jump as rising bond and stock market volatility helped attract safe-haven and short covering. In the week to February, however, the overall dollar short ten IMM currency futures and the Dollar Index saw a small increase to $31.4 billion with buying of CHF and especially GBP being off-set by EUR and accelerated JPY selling.

Financials

Speculators maintained their Cboe VIX futures short at a 12 month high at 163k lots, just days before jumping on rising yields and lower stocks unease.

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

Start trading now

This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank

Swiss Franc in Troubles

Gold holds above the 1765 USD/oz.

Silver on it’s way to test crucial horizontal resistance.

Nasdaq traditionally with a V-shape reversal.

DAX bounces of previous bull market highs and aims for the ATH.

The EURUSD pushes higher after the breakout of the neckline and the horizontal resistance.

The USDCHF with a long-term buy signal after major bullish breakout.

The EURCHF surges after price broke the key horizontal resistance.

The EURPLN escapes from the rectangle and aims for new mid-term highs.

For a look at all of today’s economic events, check out our economic calendar.

Commodities Rise as Dollar Falls

Gold bounces off the 1765 USD/oz support.

Silver also goes higher after bouncing off an important dynamic support.

The Nasdaq tests the mid-term up trendline.

The DAX is in a daily hammer, so far…

The EURUSD is a few steps from a major buy signal.

The USDCHF bounces off a dynamic and horizontal support.

The NZDCAD is currently attacking a major horizontal resistance, getting ready for a long-term buy signal.

The USDCAD price is in a inverse head and shoulders pattern for the second time in 5 days.

For a look at all of today’s economic events, check out our economic calendar.

DXY V S&P Feb 14 2021

To respectfully indulge words from the last post for context:

Overall, EUR/USD was the first currency in August 2020 to break above its 5 year average at 1.1300’s then the 10 year average in December 2020 at 1.2100’s. EUR/USD is categorized in the class of a risk asset and non USD currency.

EUR/USD’s early break to its 5 year average set remainder 27 currencies on a course of deep perspective as non USD currency pairs had to not only match EUR/USD’s break to significant averages but the 1000 pip rise in GBP/USD, 700 for AUD/USD and other non USD currency pairs traded weekly from overbought to overbought and a non normal price circumstance. EUR/USD’s break threw normal price markets deeply off course since August 2020.

Non USD currency pairs such as DXY, USD/CAD, USD/CHF and USD/JPY only option since August 2020 was to concur with EUR/USD and non USD rises by trading deeply oversold week to week and to break 5 and 10 year averages.

EUR/USD and non USD currency pairs as risk assets followed risk asset counterparts in stock markets higher to current richter scale overbought levels. The S&P’s at 3900.00’s trade at extreme overbought levels. The DAX achieved all time highs. Stock market longs are virtually impossible until a significant correction occurs.

DXY

DXY for example just broke above its 10 year monthly average at 89.95 and contains a long way to travel to the 5 year average at 95.00’s. A currency pair to trade at a 10 year monthly average is not only a low, low price but extraordinary and highlights the magnitude to the rises and falls since last August.

Next averages above to break are located at 91.43, 92.78 then 94.39 and 94.16. DXY from monthly averages 1 to 7 years faces stiff resistance from 94.00’s to 95.00’s. A break through this brick wall then DXY will travel easily to 97.00’s and 99.00’s.

DXY below 89.95 targets 86.43, 84.32 and 81.83 at extreme oversold.

Targets for DXY above 89.95 are located at 90.86, above 91.43 then 92.15, 92.47 and 92.66. Above 92.78 targets 92.87 and 92.89.

DXY from current ranges from 89.95 to 92.78 trade at its widest ranges. As DXY travels higher then ranges severely compress. The opposite is true for EUR/USD as the higher it trades then ranges open much wider.

Despite a low price and trade below monthly 5 year averages, DXY is mid range to oversold/ overbought.

S&P’s

DXY viewed from the S&P’s informs trade location miles above the 5 year monthly average at 2722.43 and at overbought to extremes. Overbought S&P’s reveals a healthy correction is on the way, DXY higher and EUR/USD as well as non USD currency pairs to follow much lower.

The S&P’s are held by immediate averages at 3257.68, 3119.54 and 2989.17. A correction targets 3598.53, 3416.84 and 3300.20. A 400 point correction to the S&P’s assumes DXY travels 300 ish pips higher and breaks above 92.78 to trade between 92.78 to 94.39.

S&P averages from 3257.68 travels every 100 points to 2200.00’s at the 10 year monthly average. Current S&P’s ranges are fairly suppressed however as S&P’s drop then ranges expand as the downside gains progresses.

GOLD

Gold trades above its 5 year monthly average at 1461.20 and trades misaligned to the S&P’s. Gold and the DXY are the same assets and should trade below 5 year monthly averages while the S&P’s trade above.

Gold’s drop is held by 1815.65 and below targets 1642.17 and 1543.98. Gold is deeply overbought from a medium and long term perspective. Gold is finished above at 1943.62 and short is the only trade available.

Moving forward, long USD and DXY is the best option while short Gold and the S&P’s although Gold lacks any real range capability. Gold viewed from 150 to 200 points is a viable option as it fails to contain any big price moves.

 

Indices Ready to Set New All-Time Highs

Gold bouncing of 38,2% Fibonacci and creating a head and shoulders pattern. That can be negative.

Brent is continuing the buying fiesta.

Nasdaq is ready to set new ATH.

DAX breaks the upper line of the wedge and aims for the new highs.

The EURUSD escapes from the wedge too and also climbs higher.

The AUDUSD escapes from the flag and the tests the broken resistance as a support. Definitely a bullish attitude.

The USDCHF drops below crucial horizontal and dynamic supports. This is not good for the demand.

The NZDCAD still below crucial long-term horizontal resistance. Interesting occasion for short.

The NZDUSD with a very similar setup to AUDUSD but in this case, instead of a flag, we do have a pennant.

For a look at all of today’s economic events, check out our economic calendar.

Gold Disappoints While Oil and Indices Climb Higher and Higher

Gold dropped and is aiming at the 1765 USD/oz level.

Oil, on the other hand, seems to be aiming for the stars.

The DAX is in a bullish engulfing pattern on the weekly chart that looks great for buyers.

The EURUSD has dropped significantly before bouncing. Most likely the price will test the 1.206 resistance level.

The AUDUSD is aiming higher after an inverse head and shoulders pattern.

The USDCHF met a strong horizontal resistance after a nice upswing caused by the iH&S formation.

The NZDCAD is still below the crucial resistance level of 0.923.

The USDCAD in a pennant, waiting for a breakout.

The NZDUSD is in the same situation. The price will potentially see a big move ahead.

The EURGBP has dropped like a rock after the price created a massive head and shoulders pattern.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Dollar Index (DX) Futures Technical Analysis – Testing Major Retracement Zone at 90.950 to 91.370

The U.S. Dollar reached a six-week high on Monday on weakness in the Euro, Swiss Franc and Japanese Yen amid views that the United States has an advantage in growing its economy and vaccinating its population against COVID-19.

The Euro was off 0.57% to 1.2069. The Japanese yen weakened, hovering around 105 to the U.S. Dollar, a level not seen since mid-November. Against the Swiss Franc, the U.S. Dollar was up 0.66% to .8967, its weakest level in two months.

On Monday, March U.S. Dollar Index futures settled at 90.975, up 0.406 or +0.45%.

The moves came as evidence pointing toward a stronger recovery from the coronavirus pandemic for the United States than for other countries.

In U.S. economic news, the latest economic survey showed U.S. manufacturing activity slowed slightly in January, while a measure of prices paid by factories for raw materials and other inputs jumped to its highest level in nearly 10 years, strengthening expectations inflation will perk up this year.

In Euro Zone news, the Euro weakened after Germany reported that retail sales plunged by an unexpected 9.6% in December after tighter lockdowns last year to curb the spread of COVID-19 choked consumer spending in Europe’s largest economy.

Daily March U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Monday when buyers took out the January 19 main top at 90.940. A trade through 90.030 will change the main trend to down.

The main range is 92.730 to 89.165. On Monday, the March U.S. Dollar Index tested its retracement zone at 90.950 to 91.370. This zone is controlling the near-term direction of the index.

The minor range is 90.030 to 91.050. Its 50% level or pivot at 90.540 is potential support.

The short-term range is 89.165 to 91.050. If the pivot fails as support then look for the selling to possibly extend into its retracement zone at 90.110 to 89.885.

Daily Swing Chart Technical Forecast

The direction of the March U.S. Dollar Index on Tuesday is likely to be determined by trader reaction to the main 50% level at 90.950.

Bullish Scenario

A sustained move over 90.950 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the Fibonacci level at 91.370. This is also a potential trigger point for an acceleration to the upside.

Bearish Scenario

A sustained move under 90.950 will signal the presence of sellers. If this move generates enough downside momentum then look for the selling to possibly extend into the minor pivot at 90.540.

Side Notes

The index is currently testing the most important retracement zone on the chart at 90.950 to 91.370.

Aggressive counter-trend sellers are going to try to form a potentially bearish secondary lower top on a test of this zone. Bullish trend traders are going to try to trigger a breakout over the Fibonacci level at 91.370.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Dollar Index (DX) Futures Technical Analysis – Trend Changes to Down on Trade Through 89.890

The U.S. Dollar was trading lower late Thursday with investors tending to favor higher-yielding currencies, as a slew of better-than-expected U.S. economic data and continued optimism about a massive stimulus package spurred hopes of a recovery in the world’s largest economy.

On Thursday, U.S. data showed an economy slowly getting some traction, with slightly better-than-expected initial jobless claims, upbeat housing starts data, and a higher factory index for the mid-Atlantic region.

At 19:19 GMT, March U.S. Dollar Index futures are trading 90.180, down 0.289 or -0.32%.

The greenback dropped versus currencies tied to commodity prices such as the Australian, Canadian and New Zealand Dollars. The Euro also gained, but that was attributed to the weaker U.S. Dollar as European Central Bank President Christine Lagarde warned about a renewed surge in COVID-19 infections and the prospect of prolonged restrictions that could challenge the region’s economic outlook.

Daily March U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. It turned up last Friday when buyers took out the previous main top at 90.720. However, the lack of follow-through to the upside suggests the change in trend may have been triggered by short-covering or buy stops rather than actual traders going long.

A trade through 90.790 will signal a resumption of the uptrend. The main trend will change to down on a move through 89.890.

The minor range is 89.890 to 90.790. Its 50% level at 90.340 is new resistance.

The short-term range is 89.165 to 90.790. Its 50% level at 89.980 is potential support. It’s also the last potential support before the 89.890 main bottom.

The main range is 92.730 to 89.165. Its retracement zone at 90.950 to 91.370 is the primary upside target. This zone is controlling the near-term direction of the index.

Short-Term Forecast

The direction of the March U.S. Dollar Index into the close will be determined by trader reaction to the 50% level at 90.340.

Bearish Scenario

A sustained move under 90.340 will indicate the presence of sellers. This could lead to a test of 89.980. Taking out this level will indicate the selling is getting stronger. A move through the main bottom at 89.890 will change the main trend to down. This could trigger an acceleration to the downside with the next target the low of the year at 89.165.

Bullish Scenario

A sustained move over 90.340 will signal the presence of buyers. If this generates enough upside momentum then look for the rally to possibly extend into 90.790, followed by the short-term retracement zone at 90.950 to 91.370.

For a look at all of today’s economic events, check out our economic calendar.

Dollar’s Weakness is Back

Gold creates a double bottom formation with two hammers on a daily chart.

Nasdaq and DAX bounce from the upper line of a correction pattern.

Dollar index cancels the Inverse Head and Shoulders and drops lower.

EURUSD starts bullish correction.

AUDJPY is heading higher after testing the neckline of a giant iH&S pattern.

USDCHF bounces from the neckline and drops lower with a proper sell signal.

CADCHF goes lower after the false bullish breakout from the symmetric triangle.

For a look at all of today’s economic events, check out our economic calendar.

Dollar Has to Make one More Small Step for a Major Buy Signal

Indices continue the buying bonanza.

Commodities fall down, mostly due to the stronger USD.

Dollar Index creates an iH&S pattern.

EURUSD breaks the neckline of the H&S formation.

AUDUSD bounces from the upper line of the triangle.

USDCHF with almost identical setup as the Dollar Index.

CADCHF breaks the upper line of the triangle and aims higher.

For a look at all of today’s economic events, check out our economic calendar.

American Dollar Close to a Major Buy Signal

GBPUSD reaches and bounces from a crucial horizontal resistance.

USDCHF creates a right shoulder of the iH&S pattern.

NZDUSD, on the other hand, creates a right shoulder of the H&S pattern; we are close to the neckline.

NZDCAD is in an even better spot as here the price is breaking the neckline as we speak.

CADCHF locked inside of a big symmetric triangle. Waiting for the breakout.

For a look at all of today’s economic events, check out our economic calendar.

Speculators Bet on a Continued Commodity Rally in 2021

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

The below summary highlights futures positions and changes made by hedge funds across commodities, forex, bonds and stock indices up until last Tuesday, December 8. A week where vaccine and stimulus optimism continue to propel stock markets higher and the dollar lower while bonds held steady. Commodities traded mixed with continued profit taking across agriculture commodities and a big setback for natural gas more than offsetting gains in oil, fuel products and metals, both precious and industrials.

Commodities

The Bloomberg Commodity Index traded lower by 1.2%, hurt by continued profit taking in agriculture commodities led by soybeans, wheat, cocoa and cattle together with a 16.7% drop in the price of natural gas. Overall these developments helped drive a 3% reduction in the total net long held by speculators across 24 major commodities to 2.3 million lots, but not far from the February 2017 record of 2.4 million lots. A clear sign that speculators expect more to come from the commodities in 2021 as the reflation trade gathers momentum and the dollar potentially continues to weaken.

It is also worth noting that speculative positions, compared with recent peaks in 2017 and 2018, are much more spread out across all sectors, with net long positions held in all but one (CBOT Wheat) commodity. In February 2017 when the net-long hit the mentioned record, the energy sector accounted for 56% of the total length while today that share is down to 42%.

graph 1

Energy

The combined net long in Brent (+27k lots) and WTI (-1.6k lots) reached 602k lots, the highest since January. This after Brent began toying with $50/b as the market, despite current Covid-19 lockdowns and loss of mobility, continued to price in a vaccine-led recovery next year. The natural gas long was cut by 26% by in response to a dramatic 16.7% sell-off on demand concerns driven by unseasonal warm weather across the U.S.

Metals

Gold was bought for a second week in response to the rally that followed the failed break below $1800/oz. The bulk of the 19k lots of buying was driven by fresh longs, something that also helps to explain the increased volatility seen last week when the move above and subsequent failure to hold $1850/oz triggered a 45 dollar correction last Wednesday. Net platinum buying extended into a fifth week and during this time, the white metal has outperformed its yellow big brother by 17%.

Speculators in silver meanwhile maintained a net long close to 43k lots for a fourth consecutive week. Thereby extending the lack of price response in a week where the metal rallied by close to 3%. During a week of sideways trading before popping to a fresh seven-year high, the net long in HG copper rose by 5% to 90.4k lots, not far from the 91.6k lots record high recorded two months ago.

Agriculture

For a second week, a broad but relatively small amount of selling was seen across the sector with the soybeans complex and sugar accounting for the bulk of the 58k lots reduction to 1 million lots. Only short position was held in CBOT wheat before a post-WASDE and Russia export tax and quota threats gave the crop a strong end of week boost.

graph 2

Forex

Dollar bears continued to be awarded in the week to December 8 as the Greenback spiraled lower to reach the lowest against both the euro and the Bloomberg Dollar Index since April 2018. The tumble being part of a broader vaccine optimism led move across financial markets pricing in a recovery in global growth for 2021 and the potential for better investment opportunities outside the U.S.

These developments helped drive a 14% increase in the combined dollar short against ten IMM currency futures and the Dollar Index to $30.7 billion, a ten-week high. The bulk of the $3.7 billion of net dollar selling occurred against the euro which saw a 12% rise in the euro net-long to 156,429 lots (€19.6 billion). The other and more surprising contribution came from Sterling which despite trading lower on the week saw 13,609 lots of net buying which swung the net back to a long for the first time in three months.

The Swiss franc together with the Mexican Peso and Russian Ruble saw net selling while the net long in Japanese yen reached a fresh four year high at 48,166 lots.

graph 3

Financials

graph 2

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

COT

This article is provided by COT, part of Saxo Bank Group through RSS feeds on FX Empire

Trading Currencies: One Down, One Still Very Much Standing

The 2 major risk events of the past 9 months continue to be the key drivers of FX risk trading.

  1. Caseloads of COVID-19 and a possible vaccine to it.
  2. The US presidential election.

The second point has now officially been ‘declared’ with President Trump finally allowing a transition process to President-Elect Biden to begin. This was probably seen as an ‘unexpected’ outcome considering the Trump team is still pursuing legal challenges in several of the swing states yet to official declare.

However, with Georgia officials declaring this week if there will be any legal challenge remaining, that could, in theory, be successful in the remaining states. Yet, it would still not be enough to get Trump to 270 electoral colleague votes that are needed to be re-elected. This ‘risk event’ is now officially over. However, the Trump presidency is not – that is still official until January 19 and there are still some risks here.

Is it time to go for risk-on markets?

The reaction to Trump’s concession was one of risk-on, the equity market made record highs in the US and the USD fell against all G10 currencies on the news, with risk currencies in the form of the AUD, NOK and SEK being the biggest movers.

AUD/USD is again through $0.73. While FX strategists at UOB group predicts that the pair may break above 0.7400 in 1-3 weeks’ time, the question for it over the final week of 2020 is will the risk levers continue to push it higher? And, will that mean a year-end target of $0.75 is still possible? The macrothematics suggest yes, but real events could still be a headwind.

Namely COVID-19 cases.

That first point is really the major catalyst now for further risk rallies or pull backs, and as discussed in last week’s note caseloads are still growing almost exponentially in the US and Europe, not to mention that global cases have already surged past 60 million, which is weighing on short-term confidence.

Beware of short-term risks

Case-in-point: the US consumer confidence fell to back into pessimism in November to 96.1 from 101.4 (100 is equilibrium). Future expectations deteriorated (fell to 89.5 from 98.2) specifically due to a resurgence in COVID cases and the subsequent restrictions. The Richmond Fed manufacturing survey for November fell more than expected, to 15 versus estimates of 20 and well down on last month’s record high of 29, most components slipped and the most notable was new orders down to 12 from 32.

This must be seen as a short-term risk for FX. Watch for possible switching to the JPY and CHF as traders cover possible volatility to end the year.

Key dates before the end of 2021

Major events that can bring volatility to the markets in the remaining weeks of this year:

  • December 10 – Vaccine Development: Some sources suggest that Emergency Use Authorization for both Pfizer and Moderna vaccines may potentially be approved on this date
  • December 14 – US Presidential Election: Members of the Electoral College will meet and cast their ballots for president and vice president
  • December 31 – Brexit: End of the transition period

This article is prepared by Lucia Han from Mitrade and is for reference only. We do not represent that the material provided here is accurate, current or complete. The article content neither takes into account your personal investment objects nor your financial situation, and therefore it should not be relied upon as such. You should seek for your own advice.

Join the “Classics without Borders” Contest and Get Real Money Prizes

FXOpen has been pleasing traders with its Forex contests for many years, and this time it is launching the contest for beginners and those who have registered with FXOpen no earlier than January 2020. 10 best traders will share the prize fund of 1500 USD.

The “Classics without borders” contest starts on November 30, 2020 and will last until December 24, 2020. Registration is open now and will be closed on December 13, 2020.

Terms of the contest:

  • Start deposit: 5000 USD;
  • Leverage: 1:100;
  • Trading instruments: EUR/USD, GBP/USD, USD/JPY, USD/CHF, USD/CAD, AUD/USD, NZD/USD, EUR/GBP and stocks;
  • Account type: contest demo ECN;
  • Advisors and locking: allowed.

Terms for receiving the prize:

It is required to increase the initial deposit by at least 20%, and to make at least 10 trades with total volume of 10 lots. The winners will be the best 10 Equity traders who have met the above conditions.

How to join the contest?

New users must register in ForexCup and join the contest with data from your personal account. Existing FXOpen clients have to pass verification in MyFXOpen and join the competition with data from MyFXOpen or ForexCup. It should be noted that all contest accounts are blocked until the contest starts.

Please visit FXOpen broker official website to learn more.

U.S. Dollar Index (DX) Futures Technical Analysis – Weakens Under 93.275, Strengthens Over 93.775

The U.S. Dollar is on the defensive again versus a group of major currencies on Tuesday as rising optimism that U.S. lawmakers could agree on new fiscal stimulus to blunt the economic impact of the coronavirus dampened demand for safer assets.

Risk appetite also improved after U.S. President Donald Trump left the hospital and returned to the White House following treatment for COVID-19, a development viewed as reducing political uncertainties in the near-term.

At 14:20 GMT, December U.S. Dollar Index futures are trading 93.475, down 0.070 or -0.07%.

The lead taken by Trump’s presidential opponent Joe Biden in electoral polls ahead of next month’s election is also seen as negative for the U.S. currency, according to Reuters.

Daily December U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but momentum is trending lower. The main trend will change to down on a trade through 92.755. A move through 94.795 will signal a resumption of the uptrend.

The minor trend is down. This is controlling the momentum. A trade through 94.090 will change the minor trend to up.

The first minor range is 92.755 to 94.795. Its 50% level at 93.775 is resistance.

The second minor range is 91.750 to 94.795. Its 50% level at 93.275 is potential support. It’s also the last support before the 92.755 main bottom.

Daily Swing Chart Technical Forecast

The December U.S. Dollar Index is currently hovering above 93.275. This suggests that buyers are coming in to defend the uptrend. Trader reaction to this level will determine the intraday direction of the market.

Bullish Scenario

A sustained move over 93.275 will indicate the presence of buyers. The first upside target is 93.775. Overtaking this level will indicate the buying is getting stronger. This could lead to a test of the minor top at 94.090.

Bearish Scenario

A sustained move under 93.275 will signal the presence of sellers. This could trigger an acceleration to the downside with 92.755 the next likely downside target. A trade through this price changes the trend to down.

For a look at all of today’s economic events, check out our economic calendar.

Risk Appetite Firms as Signs of Trump’s Improving Health Soothes Markets

The early trade in the financial markets on Monday indicate a slight rise in demand for riskier assets, suggesting that investors are pinning their hopes on a quick recovery from President Donald Trump and a discharge from the hospital later in the day, easing some of the political uncertainty that rattled global markets during Friday’s session.

Trump Could Return to White House on Monday

President Trump was helicoptered to Walter Reed Hospital for treatment for the coronavirus on Friday, but his doctors say he has responded well and could return to the White House on Monday.

Doctors treating Trump say they are pleased with his progress. Relief about his health could fuel a rally in equities and other risky assets as investors prepare for the run-up to next month’s U.S. presidential election.

Global investors were stunned late Thursday/early Friday after Trump announced that he and the first lady had tested positive for coronavirus.

With less than a month until the presidential election on November 3, Trump’s contraction of the coronavirus is another source of market volatility that makes the outcome of the vote even more difficult to predict, Reuters said.

Global Equity Markets Edge Higher in Early Trade

Early Monday, Asian-Pacific stock indexes were trading higher with the Australian S&P/ASX 200 futures up 1.16%, Japanese stock futures rising 0.75%, and Hong Kong’s Hang Seng Index futures up 1.38%.

In the U.S., the e-mini S&P 500 Index futures are up about 0.45% in early trading, while NASDAQ futures gained about 0.58%.

US Dollar Struggling Against Most Majors

The U.S. Dollar is losing ground against the riskier commodity-currencies. The AUD/USD is trading up 0.33%. The NZD/USD is gaining 0.18% and the Canadian Dollar is posting a 0.22% gain.

The Euro is up 0.14% and the British Pound is trading 0.07% higher. Surprisingly, the Swiss Franc is also up 0.41%. The best indication that today may be shaping up to be a “risk-on” session is the 0.20% gain by the Dollar/Yen.

Overall Assessment

Equities and other risk-on currencies should remain firm throughout the session by easing concerns about Trump’s health. Meanwhile, for the U.S. Dollar, the direction is not that clear cut. It could fall against most majors if risk appetite increases, but it could rise against the Japanese Yen if the currency loses its appeal as a safe-haven asset.

For a look at all of today’s economic events, check out our economic calendar.

Dollar and Stock Markets Mature for a Correction

DAX makes contact with the first important resistance

SP500 corrects massive upswing from Monday

CAC stays above the major support after the false bearish breakout

Dollar Index goes lower after the head and shoulders pattern

EURUSD tests the first crucial horizontal resistance

USDCHF on the other hand, tests important support

EURJPY reverses higher after the false bearish breakout from the rectangle

Gold on the way to test the 1906 USD/oz

For a look at all of today’s economic events, check out our economic calendar.

U.S. Dollar Index (DX) Futures Technical Analysis – In Position to Test Retracement Zone at 94.770 – 95.480

The U.S. Dollar is trading flat against a basket of currencies on Thursday after hitting its highest level since July 24 earlier in the session as it continued to edge towards a major retracement zone on the daily chart.

The safe-haven rally continued following another tech-driven sell-off on Wall Street and while concerns for the global economic recovery amid mounting coronavirus cases continued to weigh on sentiment.

At 07:44 GMT, December U.S. Dollar Index futures are trading 94.410, down 0.033 or -0.03%. This is down slightly from the intraday high of 94.560.

The greenback is being supported this week by a plunge in risk assets as tech stocks tumbled once again, with investors also spooked by uncertainty around the resurgence in coronavirus cases and prospects of further federal stimulus measures.

Although Federal Reserve policymakers on Wednesday vowed to keep interest rates near zero and retain an accommodative monetary policy stance for years, it also called for greater help from Congress.

Meanwhile, U.S. business activity slowed in September with manufacturing gains offset by a reversal in the services sector as the recovery appears to be losing momentum at the end of the third quarter.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was confirmed earlier in the session when buyers took out Wednesday’s high. A trade through 92.755 will change the main trend to down.

The main range is 97.785 to 91.750. Its retracement zone at 94.770 to 95.480 is the primary upside target. Aggressive counter-trend sellers could come in on the first test of this area.

The current minor range is 92.755 to 94.560. Its 50% level at 93.660 is a potential downside target. This level will move up as the index moves higher.

Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index on Thursday is likely to be determined by trader reaction to Thursday’s close at 94.445.

Bullish Scenario

A sustained move over 94.445 will indicate the presence of buyers. This could drive the index into the main 50% level at 94.770. Look for sellers on the initial test of this level. Overcoming it, however, could trigger an acceleration into the main Fibonacci level at 95.480.

Bearish Scenario

A sustained move under 94.445 will signal the presence of sellers. This would put the index in a position to post a potentially bearish closing price reversal top that could lead to the start of a 2 to 3 day correction.

The first downside target is the 50% level at 93.660, followed by a second 50% level at 93.155.

Side Notes

Thursday’s focus will shift to the latest jobless claims report from the Labor Department, due at 12:30 GMT, with economists polled by Reuters expecting new unemployment filings last week to come in at 840,000, down from 860,000 the previous week. Continuing claims are also expected to fall.

Fed Chairman Jerome Powell and Treasury Secretary Steven Mnuchin will resume testimony before Congress at 14:00 GMT, while August’s new home sales figures are published at the same time.

Keep an eye on the jobless claims report for any surprises that could create a volatile response by the U.S. Dollar.

For a look at all of today’s economic events, check out our economic calendar.

Stocks Surge Higher. Dollar Give Backs the Gains

 

Dollar Index is giving back the gains. Wedge promotes a further drop

USD/CAD goes under 1.33 again

GBP/USD aims 1.32

AUD/NZD tries to establish presence above 1.084

DAX breaks crucial resistance on 12800

S&P 500 close to the all-time highs

CAC breaks the neckline of the H&S pattern

EUR/USD breaks mid-term down trend line

USD/JPY tries to close the day above 106

Gold drops and tests the 1980 USD/oz support

USD/PLN breaks the lower line of the wedge

USD/CHF on the other hand, breaks the lower line of the flag

GBP/JPY tests the upper line of the sideways trend

Dollar Short at Nine-Year High

Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

This summary highlights futures positions and changes made by speculators such as hedge funds and CTA’s across forex, bonds and stocks up until last Tuesday, August 4. Appetite for risk during this period remained strong with dollar weakness and rising negative real yields feeding a rise in prices across global asset markets. The S&P 500 Index added 2.7% to reach a fresh cycle high while the dollar weakened further against a basket of major currencies. The yield on U.S. ten-year notes dropped 7 bp to 0.50%, thereby supporting a further fall in real yields to a fresh record low at -1.06%.

Continued dollar weakness, albeit at a slowing pace, helped boost the net-short against ten IMM currencies and the Dollar Index to a nine-year high at $29.5 billion. However, just like the previous five weeks the expanding dollar short position was almost solely driven by another rise in the euro net-long to a fresh record of 180,648 lots (€22.6 billion). The 15% increase occurred as the cross challenged and eventually later in the week retraced from €1.19.

Other noticeable changes were a rise in the Swiss franc net-long to 11,660 lots, the highest since March 2014 as well as an almost doubling of the Canadian dollar short to 23,195 lots.

Leveraged fund positions in bonds, stocks and VIX

What is the Commitments of Traders report?

The Commitments of Traders (COT) report is issued by the US Commodity Futures Trading Commission (CFTC) every Friday at 15:30 EST with data from the week ending the previous Tuesday. The report breaks down the open interest across major futures markets from bonds, stock index, currencies and commodities. The ICE Futures Europe Exchange issues a similar report, also on Fridays, covering Brent crude oil and gas oil.

In commodities, the open interest is broken into the following categories: Producer/Merchant/Processor/User; Swap Dealers; Managed Money and other.

In financials the categories are Dealer/Intermediary; Asset Manager/Institutional; Managed Money and other.

Our focus is primarily on the behaviour of Managed Money traders such as commodity trading advisors (CTA), commodity pool operators (CPO), and unregistered funds.

They are likely to have tight stops and no underlying exposure that is being hedged. This makes them most reactive to changes in fundamental or technical price developments. It provides views about major trends but also helps to decipher when a reversal is looming.

For a look at all of today’s economic events, check out our economic calendar.

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

Start trading now

This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire