Archive for Opinions

29 Apr

Trade Of The Week: USDJPY monster move fuels intervention talk

By ForexTime 

  • USDJPY tumbles 500 pips!
  • Yen rebound sparks intervention talk
  • Watch out for Japan data & USD volatility
  • More wild swings on horizon?
  • Key level of interest at 155.00

Everybody is talking about the Japanese Yen, and why not?

Its dramatic reversal against the dollar has sparked talks around possible intervention by Japanese authorities.

However, with no announcements made so far and Japan’s top currency official having “no comments for now”, market watchers may be left scratching their heads for the time being. The thin liquidity thanks to a public holiday in Japan has also been flagged as a reason for such aggressive price moves.

Nevertheless, the USDJPY has earned a place in our “potential monster movers”, especially after we cautioned over possibly volatility last week.

What exactly happened?

On Monday morning, the USDJPY timebomb exploded after hitting an intraday peak of 160.22.

After a period of consolidation, prices collapsed roughly 500 pips within a 4-hour window.

What could happen next?

Investors will have their ears to the ground for any official announcements from Japanese authorities.

Attention will also be directed towards Japan’s Ministry of Finance’s monthly intervention data which will confirm whether intervention took place or not, and if so – by how much.

USDJPY set for more wild swings?

Given how this is an event-heavy week for the USD, more wild movements could be on the horizon for the USDJPY. Speculation around government intervention may add to the potent cocktail of themes that could lead to more volatile price movements.

With all the above said, keep an eye on these 3 factors:

    1) Key Japan data

Incoming data from Japan could add more fuel to the Yen’s volatility.

Investors will direct their focus towards the latest unemployment figures, industrial production, and retail sales which could offer fresh insight into the health of the economy. Should these reports also impact bets around when next the BoJ will hike rates in 2024, this could spark more currency movements.

Traders are currently pricing in a 25% probability of a 10-basis point hike in June with this jumping to roughly 80% in July.

  • Should overall data support the case around the BoJ hiking rates again in the Summer, this could boost the Yen – dragging the USDPY lower as a result.
  • Should data disappoint and rate hike bets cool, the USDPY may push higher as the Yen weakens.

 

    2) Dollar volatility

It’s a big week for the dollar thanks to the Fed rate decision and US jobs report.

Over the past few weeks, the dollar has appreciated as economic data and hawkish Fed officials cooled expectations around lower US interest rates in 2024.

Traders are only pricing in the first rate cut by November with the probability of another cut by December around 45%.

This is a big deal due to the wide gap between Japan’s and the United States’ interest rates, which has been behind the USDJPY’s upside.

  • The USDJPY could push higher if the Fed meeting and US data support the “higher for longer” argument on rates.​​​​​​​
  • Should the dollar weaken on disappointing data and a dovish Fed, this may send the USDJPY lower.

 

    3) Technical forces

The aggressively bearish daily candle signals further downside for the USDJPY.

However, for bears to truly seize control – a solid daily close below the 155.00 support is required.

The Relative Strength Index has already slipped back below 70, after being heavily overbought since early April.

  • Sustained weakness below 155.00 may open a path back towards 154.20 and 153.60.
  • Should prices push back above 157.25, this may encourage a move back towards 158.40 and 159.00.​​​​​​​

Bloomberg’s FX model forecasts a 77% chance that USDJPY will trade within the 152.35 – 159.04 range over the next one week.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Forex and Currency News Opinions
27 Apr

Speculator Extremes: Silver, Copper, Coffee & VIX lead Futures Positions

By InvestMacro

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on April 23th 2024.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the data table or cot leaders table)

Here Are This Week’s Most Bullish Speculator Positions:

Silver


The Silver speculator position comes in as the most bullish extreme standing this week. The Silver speculator level is currently at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 25.5 this week. The overall net speculator position was a total of 59,340 net contracts this week with an increase by 5,981 contract in the weekly speculator bets.

Speculators or Non-Commercials Notes:

Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.

These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

Copper


The Copper speculator position comes next in the extreme standings this week. The Copper speculator level is now at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score was 56.3 this week. The speculator position registered 58,394 net contracts this week with a weekly gain of 10,825 contracts in speculator bets.

Coffee


The Coffee speculator position comes in third this week in the extreme standings. The Coffee speculator level resides at a 96.0 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 15.1 this week. The overall speculator position was 71,914 net contracts this week with a shortfall of -4,157 contracts in the weekly speculator bets.

VIX


The VIX speculator position comes up number four in the extreme standings this week. The VIX speculator level is at a 95.6 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 33.7 this week. The overall speculator position was -18,000 net contracts this week with a rise of 4,474 contracts in the speculator bets.

Bloomberg Commodity Index


The Bloomberg Commodity Index speculator position rounds out the top five in this week’s bullish extreme standings. The Bloomberg Commodity Index speculator level sits at a 93.2 percent score of its 3-year range. The six-week trend for the speculator strength score was 23.0 this week.

The speculator position was -2,979 net contracts this week with a change of 434 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

Japanese Yen


The Japanese Yen speculator position comes in as the most bearish extreme standing this week. The Japanese Yen speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -48.5 this week. The overall speculator position was -179,919 net contracts this week with a drop of -14,300 contracts in the speculator bets.

Swiss Franc


The Swiss Franc speculator position comes in next for the most bearish extreme standing on the week. The Swiss Franc speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -44.0 this week. The speculator position was -42,562 net contracts this week with a decline of -6,350 contracts in the weekly speculator bets.

US Dollar Index


The US Dollar Index speculator position comes in as third most bearish extreme standing of the week. The US Dollar Index speculator level resides at a 4.4 percent score of its 3-year range.

The six-week trend for the speculator strength score was -13.5 this week. The overall speculator position was -213 net contracts this week with a change of 716 contracts in the speculator bets.

Canadian Dollar


The Canadian Dollar speculator position comes in as this week’s fourth most bearish extreme standing. The Canadian Dollar speculator level is at a 4.8 percent score of its 3-year range.

The six-week trend for the speculator strength score was -34.6 this week. The speculator position was -76,450 net contracts this week with a gain of 6,365 contracts in the weekly speculator bets.

Sugar


Finally, the Sugar speculator position comes in as the fifth most bearish extreme standing for this week. The Sugar speculator level is at a 6.9 percent score of its 3-year range.

The six-week trend for the speculator strength score was -14.4 this week. The speculator position was 45,101 net contracts this week with a drop of -17,463 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

*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) 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) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Opinions
26 Apr

Week Ahead: US500 braced for jam-packed week

By ForexTime 

  • US500 ↓ 4% month-to-date
  • High impact events could rock index
  • Fed decision, earnings & NFP in focus
  • Key levels of interest at 5129, 5034 & 4970
  • Major breakout on horizon?

If you thought the last few days were eventful, wait until you see the lineup for the week ahead!

A mashup up of high-impact data, corporate earnings, and the Fed rate decision will be in focus:

Saturday, 27th April

  • CN50: China industrial profits

Monday, 29th April

  • EU50: Eurozone economic & consumer confidence
  • GER40: Germany CPI
  • SG20: Singapore unemployment
  • CN50: Chinese megabank earnings

Tuesday, 30th April

  • AU200: Australia retail sales
  • CN50: China Caixin manufacturing PMI, non-manufacturing PMI
  • EU50: Eurozone CPI, GDP
  • GER40: Germany GDP, unemployment
  • JP225: Japan unemployment, industrial production, retail sales
  • TWN: Taiwan GDP
  • UK100: HSBC earnings
  • US500: Amazon earnings

Wednesday, 1st May

  • NZD: New Zealand unemployment, RBNZ financial stability report
  • GBP: UK S&P Global Manufacturing PMI
  • USD: US construction spending, ISM manufacturing
  • US500: Fed rate decision

Thursday, 2nd May

  • AUD: Australia building approvals, trade balance
  • EUR: Eurozone S&P Global Manufacturing PMI
  • GER40: Germany S&P Manufacturing PMI
  • HK50: Hong Kong GDP
  • TWN: Taiwan S&P Global Manufacturing PMI
  • GBP: UK holds local elections
  • USD:  US factory orders, initial jobless claims
  • JPY: BoJ March meeting minutes
  • NAS100: Apple earnings

Friday, 3rd May

  • EUR: Eurozone unemployment
  • HK50: Hong Kong retail sales
  • SG20: Singapore retail sales
  • US500: US April jobs report, ISM services, Fed speech

Volatility could be the name of the game due to the scheduled releases and high-risk events.

The spotlight shines on the US500 which is down almost 4% month-to-date as of writing.

Note: US500 tracks the S&P 500 index – the benchmark used to measure the stock performance of the largest listed US companies.

Here are 4 reasons why the US500 could see more big moves:

    1) Fed rate decisions

The Fed is widely expected to leave interest rates unchanged next week.

Despite the US economy growing less than expected in Q1, sticky inflation and hawkish comments by Fed officials have cooled Fed rate cut bets for 2024. Much attention will be directed towards the policy statement and Fed Chair Jerome Powell’s conference for fresh clues on the central bank’s next move.

Traders are currently pricing in only a 35% probability of a 25-basis point cut in July with this jumping to 75% by September.

Note: The incoming PCE report this afternoon could impact these odds.

Given how tech stocks account for roughly 29% of the S&P 500 weighting, the Fed decision could spark volatility.

Note: Tech stocks are influenced by interest rates because their value is based on earnings forecasted in the future.

 

    2) Apple & Amazon earnings

Four of the so-called “Magnificent 7” tech titans have already reported their earnings, with the spotlight now on Amazon and Apple in the week ahead.

Big tech earnings have satisfied expectations so far with stellar results from Microsoft and Alphabet boosting risk sentiment. The bar has been set high with investors looking for solid earnings from the remaining tech giants to keep the market rally alive. Given how Apple and Amazon are in the top 5 weighting of the S&P 500:

  • A set of positive earnings may push the index higher.
  • Should earnings miss forecasts, this could send the index lower.

 

    3) US April NFP report

Markets expect the US economy to have created 250,000 jobs in April, compared to the 303,000 in the previous month. The unemployment rate is forecast to remain unchanged at 3.8% while average earnings are forecast to stay at 0.3% MoM.

  • A stronger-than-expected US jobs report could support the “higher for longer” narrative on rates, hitting the US500 as a result.
  • However, evidence of a cooling US jobs market could boost bets around lower US rates, which could support the US500.

 

    4) Technical forces 

The US500 looks noisy on the daily charts thanks to fundamental forces but bulls seem to be in the vicinity. Prices are trading above the 100-day SMA but resistance can be found at the 50-day SMA.

  • A strong breakout and daily close above the 50-day SMA could open a path towards 5200.
  • Should prices slip back below 5035, this could open a path towards the 100-day and possibly 4910.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Opinions Stock Market News
25 Apr

The US is one of the least trade-oriented countries in the world – despite laying the groundwork for today’s globalized system

By Peter A. Coclanis, University of North Carolina at Chapel Hill and Leon Fink, University of Illinois Chicago 

Given the spate of news about international trade lately, Americans might be surprised to learn that the U.S. isn’t very dependent on it. Indeed, looking at trade as a percentage of gross domestic product – a metric economists sometimes call the “openness index” – the U.S. is one of the least trade-oriented nations in the world.

In 2022, the U.S. trade-to-GDP ratio was 27%, according to the World Bank. That means the total value of U.S. imports and exports of goods and services combined equaled 27% of the country’s GDP. That’s far below the global average of 63%.

In fact, of the 193 countries examined by the World Bank, only two were less involved in international trade than the U.S. Those were Nigeria, at 26%, and Sudan at 3%. Most world economic powers scored considerably higher, with Germany at 100%, France at 73%, the U.K. at 70%, India at 49%, and China at 38%. Who knew?

Making sense of trade-to-GDP ratios

What do all these numbers mean? It’s tricky because many factors can influence a trade-to-GDP ratio. For example, a country can have a low ratio in large part because it has high tariffs or other protectionist policies; Nigeria, Ethiopia and Pakistan come to mind in this regard. Others, such as Turkmenistan, have low ratios because they’re geographically remote.

A low trade-to-GDP ratio may also arise from the fact that a country is large, wealthy and developed, with a diversified economy that can provide most of the goods and services it needs domestically. We think this explains a lot about the U.S.’s extremely low ratio.

On the other hand, extremely high ratios of well over 300% are found in a few tiny countries due to necessity, location or both. Countries such as Luxembourg and the microstate of San Marino are both located in high-trade Europe and are too small to survive without extensive trade.

Meanwhile, well-positioned locations such as Singapore and Hong Kong have historically thrived as true trade entrepôts. And Djibouti, in East Africa, is increasingly performing a similar function.

It’s also important to look at the trajectory of trade-to-GDP ratios over time. As for the U.S., the ratio rose from 9% in 1960 to just under 11% in 1970 to 25% by 2000.

Since then, the ratio has ranged from 22% in 2002 to 31% in 2012 – remaining low compared to almost every other country. The U.S. has registered a relatively low trade-to-GDP ratio throughout its history.

How the US got here: A roller-coaster history of American trade policy

The liberal, open institutional architecture that shapes today’s global economy was largely erected by the U.S. during World War II and shortly afterward. From then until the steep rise of trade-to-GDP ratios from 1970 to 2000, it was easy for U.S. political leaders to support engagement in relatively free trade.

After World War II, a regime of open trade and fixed exchange rates – associated with the Bretton Woods Agreement establishing both the International Monetary Fund and the World Bank in 1944, and the General Agreement on Tariffs and Trade in 1947 – succeeded in promoting trade and growth. Those policies also stabilized currencies and balance-of-payments ledgers. Devastated war economies and newly industrializing nations entered and in time helped fashion a new world economic order underwritten and overseen by the U.S.

During the 1950s and 1960s, the U.S. inevitably lost some of its edge in agricultural and manufacturing markets as overseas economies rebounded. But its low trade-to-GDP ratio and ideological commitment to anti-communist allies mitigated domestic political unrest around trade issues. Capital controls and a series of legislative and diplomatic fixes limited international trade’s role in U.S. economic dislocations.

Things changed dramatically in the 1970s, as indicated by the sizable increases in trade-to-GDP ratios for the U.S. and the world as a whole during that period. One key factor was the collapse of state-centered financial regulation. That opened the world to increasingly fluid goods and capital transfers as encouraged under world trade agreements. This was also the period when cheaper goods from Japan and Taiwan began taking hold in the U.S..

Bigger challenges to the stability of postwar working-class livelihoods arose from productivity-enhancing innovations in production, transportation and communications. Two further far-reaching factors were the opening of China’s economy beginning in 1979, and the demise of the Soviet bloc between 1989 and 1991.

Two key free-trade developments took place in the 1990s. The North American Free Trade Agreement of 1993 opened U.S. borders on the north and south to unprecedented transfers of capital, trade and migration. Then, in 2001, China gained “permanent normal trade relations status” with the U.S., thus smoothing its entry into the World Trade Organization. In both cases, the economic dynamism unleashed by the moves was accompanied by major job losses in American manufacturing.

As the U.S. trade-to-GDP ratio climbed steadily from 20% in 1990 to nearly 30% by 2010, trade became an increasingly high-profile issue in U.S. politics. Critics were especially worried by the prospect of trade hurting American jobs and living standards.

After NAFTA’s passage and China’s entry into the WTO, many Americans and interest groups representing them soured on “globalization.” That globalization was embodied in the long-open trade regime put into place after World War II.

So it’s no wonder that Donald Trump was elected president in 2016 while calling for stiff new tariffs on China and a border wall against Mexico. And President Joe Biden hasn’t backed off significantly from Trump’s protectionist trade policies.

U.S. policymakers are unlikely to move further toward trade dependence anytime soon, much less toward any new free-trade agreements. Rather, we’re likely to hear skepticism from both Biden and Trump when the subject of open trade comes up.

Ironically, the open-trade world the U.S. did so much to create seems to depend on Americans limiting their participation in it.The Conversation

About the Author:

Peter A. Coclanis, Professor of History; Director of the Global Research Institute, University of North Carolina at Chapel Hill and Leon Fink, Professor Emeritus of History, University of Illinois Chicago

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Economics & Fundamentals Opinions
25 Apr

Development finance: how it works, where it goes, why it’s needed

By Abdul Latif Alhassan, University of Cape Town and Bomikazi Zeka, University of Canberra

Development finance is the invisible glue that connects public and private financing for projects that have social, economic and environmental outcomes. These include improved infrastructure, better waste management and sanitation, financial inclusion, clean energy and sustainable agriculture.

The goal of development finance is to create positive social, economic or environmental outcomes through investments made by financial institutions such as banks, insurance companies and pension funds in addition to contributions made by development finance institutions, multilateral partners and NGOs. These investments generally generate spillovers into the development agendas of African countries. The contribution of NGOs such as philanthropic and civil society organisations may not be financial. Their contributions come through advocacy, activism, community engagement, research or social services. Development finance experts Latif Alhassan and Bomikazi Zeka explain how it works.

Why is it important?

Development finance addresses the failures or limitations of traditional financial institutions such as banks. It does this by allocating resources to social needs such as education, health, infrastructure and energy.

The essence of development finance is to mobilise both financial and non-financial resources through partnership among development funders and stakeholders. The aim is to achieve development outcomes that would not have happened without their intervention or contribution.

The Infrastructure Consortium for Africa is an example of this kind of partnership. It is made up of multilateral partners and development finance institutions. In 2019/2020 it mobilised and invested US$83 billion for the development of energy, water, transport and sanitation infrastructure.

Development finance can also draw in additional funding from private entities to finance projects with socially and environmentally desirable outcomes. Traditional financial institutions such as banks don’t have the incentives to do this. But a network of development funders and stakeholders can help raise funding. It can also draw on different kinds of expertise.

What’s the difference between development finance and corporate finance?

Corporate finance emphasises the principles of risk and return. The funding of any economic activity largely depends on how risky the activity is and its ability to generate revenue. Institutions like banks, asset managers and insurance companies make investment decisions on the basis of risk versus return. This makes it harder to fund projects and activities with sustainable development outcomes because the risks are often high. And revenue streams aren’t always assured. An example would be providing finance for small businesses.

Development finance considers other factors alongside risk and return. Social impact may be one. Because it applies a wider lens, other key players are more involved. They include:

Financial institutions, such as banks, insurance companies, investment companies and pension funds, do also get involved sometimes. But this is usually through the use of responsible investment strategies. These incorporate environmental, social and governance factors into investment decisions.

Development funders provide more than just debt and equity capital. They provide concessionary loans, venture philanthropy, project finance, grants, sustainable financial instruments (such as green bonds and other forms of responsible investing) and advocacy or activism engagements.

Development finance institutions are intentional about promoting sustainable development. Instruments such as venture and patient capital recognise that small businesses face funding and cash flow challenges. They allow for more flexibility in lending arrangements.

How do countries access it? Is it harder for African countries?

In Africa, development projects have traditionally been funded by national governments through annual budgetary allocations. In some cases national development banks have been set up.

The problem with relying on national budgets is that it places a lot of pressure on the taxpayer as a source of revenue.

Huge financial commitments are required for countries on the continent to achieve the development goals they’ve set for themselves. For example, the African Union plans to transform Africa into a global powerhouse by the year 2063. For its part, the United Nations has an agenda for all countries to carry out a sustainable development plan by 2030.

The annual estimated funding requirements to achieve these plans is US$200 million. The financing gap for the African context until 2030 is US$1.6 trillion.

Collaboration with development funders and stakeholders is needed to achieve this.

What three things stand out as windfalls from development finance?

Firstly, stimulating economic activities by financing the initiatives of vulnerable or marginalised groups.

For example, women-owned businesses find it difficult to access funding. Development finance institutions are well placed to step in. Examples include the Development Bank of Ghana, Development Bank of Namibia, Development Bank of Mauritius and Eswatini Development Finance Corporation. They can help local businesses to keep afloat during tough times. For example, the Small Enterprise Finance Agency was set up in South Africa to help businesses affected by the rioting in 2021.

Secondly, assisting with infrastructure development. Projects can be funded that align with the needs of communities, private stakeholders and the public sector.

Thirdly, financing global challenges such as the just energy transition and the effects of climate change. For instance, development finance institutions have spearheaded the funding of climate mitigation and adaptation measures, through the provision of US$120 billion in 2012. This went up to US$200 billion by 2018.The Conversation

About the Author:

Abdul Latif Alhassan, Professor of Development Finance & Insurance, University of Cape Town and Bomikazi Zeka, Assistant Professor in Finance and Financial Planning, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Economics & Fundamentals Opinions
23 Apr

Is a Commodities Super Cycle on the Way?

Source: Streetwise Reports (4/19/24)

Are we at the start of a commodities supercycle? We sat down with McAlinden Research to see what they had to say about the current state of commodities.

McAlinden Research Partners is a global provider of original investment strategy insights. The company’s primary goal is to pinpoint profitable investment opportunities in their early stages and promptly inform their clients about these potential avenues for growth. Its founder, Joseph J. McAlinden, has over five decades of experience in the research and investment space.

With this in mind, we at Streetwise thought it would be good to sit down with some of the McAlinden team to get their take on what is currently going on in the commodities market.

First, we discussed current trends in the commodities space.

The McAlinden team told us, “In the stock market, we have a super bull market. That is not showing any signs of letting up.” However, when it comes to commodities, the market is a mixed bag. They pointed out that some commodities, such as cocoa, have soared while others, like lumber, have been struggling.

AI and Y2K

In terms of a parallel, the McAlinden team said, “Market cycles don’t repeat, but they do rhyme,” and this reminded them a bit of the late 90s and early 2000s. People thought the world was going to end with Y2K, which led to high revenue in technology companies. However, once the world realized the sky wasn’t falling, it led to a major correction.

The McAlinden team compared this to the current excitement surrounding AI. Eventually, the market will learn if AI has lived up to the hype.

Was it as scary as everyone predicted?

Maybe it won’t be as advanced as we had previously thought, and when that happens, corrections will be made like with technology during Y2K.

A Geopolitically Influenced Market

Now, the McAlinden team explained that commodities are influenced by similar fears and movements in the world. They said, “Throughout history, you see that commodities are very heavily impacted, more impacted by geopolitics than equities.”

For example, OPEC’s oil embargoes significantly impacted the prices of oil in the 1970s, and this alliance of oil producers continues to have a profound impact on the price of energy commodities today.

“Now, within OPEC, or this OPEC+Syndicate, you have countries like Russia and Saudi Arabia, which are both countries within or right on the edge of war zones,” the McAlinden team explained. “They depend . . .  the free movement of trade that is subject to a lot of risk. And that is definitely pushing up some of the commodity prices, particularly in energy.”

Still, the team made it a point to note that they don’t believe we are at the beginning of a commodities super cycle yet, though “we may get there in the next couple of years.”

Though the team pointed out that there has been a lot of chatter about “worst-case scenarios,” that is not what has happened yet.

“There’s been a lot of chances [where we thought] this could get really bad, this could  spiral out of control, but for the most part, the state actors have been pretty rational in trying to avoid these cataclysmic events that might create something like a supercycle.”

They continued, “I think that that has saved the world. [Still] there’s only so many times you can really go right up to the edge of that risk cliff and not end up falling into it. And that’s what you always have to be looking out for in commodities.”

Still, the team made it a point to note that they don’t believe we are at the beginning of a commodities super cycle yet, though “we may get there in the next couple of years.”

Once this happens, almost all commodities could appreciate in value simultaneously, but right now, they are still mixed and dependent on a myriad of factors, including geopolitics and weather.

Closer and Closer to a Recession

We then went on to discuss the current state of inflation, as commodities are also affected by this.

The McAlinden team said, “The Fed suggested they were going to cut [interest rates] three times, and traders basically ignored that, and we’re talking six or seven cuts . . . the data for the year started to show sticky inflation, and strong employment at the headline level; however, this was a bit misleading . . . there are reasons to expect inflation to improve, but [we] doubt it is going to happen in the next six months.”

When asked about the misleading nature of the employment readings, the McAlinden team turned to current headlines regarding increased job creation in the U.S. Though the most recent reports show that job growth is beating the highest estimates of economists, this does not take into account the impact of part-time / contract work accounting for the entire net increase in payrolls over the past several months. So, while job creation is accelerating, full-time work is not.

The Biden White House has succeeded in bringing down CO2 emissions to their target level, but that has come at the expense of higher oil prices because of a lack of investment.

A small part of this is the emphasis among the young workforce to enter the so-called “gig economy.” More and more working millennials and Gen Z are leaning toward freelance and contract work rather than full-time employment.

A larger aspect, according to McAlinden’s team, is “this wave of immigration that the United States is experiencing right now, which is starting to inflate the supply of labor.” People are coming to the United States to gain work visas. However, many of these workers tend to end up in part-time work. ” The number of part-time workers is exploding, but the number of full-time workers is falling, and it’s falling at a rate we haven’t seen in some time.”

This is leading us closer and closer to a recession.

The Impact of the 2024 Election

Commodities are often influenced by federal policies. With this in mind, we spoke about how commodities may be impacted based on the results of the 2024 election. The current candidates are incumbent Democrat Joseph Biden and Republican nominee Donald Trump.

“The outcome of the election will be important,” the McAlinden team told Streetwise.

Oil is one commodity in particular that may be affected. “Trump is essentially running on this drill, baby drill mantra,” they said. “One of his big campaign points is that [energy companies are]  going to drill more when he’s president . . . despite the fact that we have seen oil kind of go up to record highs, it’s only slightly higher than where we were going back to 2020. Back in 2020, production was at 13.1 million barrels, which was the record . . . Today, we’re [still] only at 13.1 million barrels. We were at 13.3 a couple of months ago.”

“If Trump was to win [that would be] bearish for oil prices because, if production is up, we’re going to see prices come down,” they explained.

This is largely because “The Biden White House’s Interior Department is very hostile to oil companies, and oil companies don’t really feel very comfortable investing a whole lot in North America right now because of the administration. So one president is saying drill, baby drill, the other is very concerned about climate change.

The Biden White House has succeeded in bringing down CO2 emissions to their target level, but that has come at the expense of higher oil prices because of a lack of investment, a lack of . . . leasing federal land to  [energy] companies, and things like that. So, there definitely will be commodity implications from the election. And we think that really is going to be pronounced in energy commodities.”

All in all, the current policies in today’s White House and the policies Trump’s administration will put in place if he is elected may be significantly different.

“If Trump was to win [that would be] bearish for oil prices because, if production is up, we’re going to see prices come down,” they explained.

The Weakening of the US Dollar

Another factor in a possible commodities supercycle is the status of the U.S. dollar.

“We’ve seen the dollar remain very strong over the past couple of years. It’s weakened a little bit since 2022 when the dollar index broke 20-year highs, but when the dollar depreciates versus other currencies, commodities tend to benefit from that since . . . commodities are priced in dollars.”

 If the Federal Reserve stays tight and keeps the dollar strong, that’s probably not so good for commodities.

This will allow other countries to buy even more commodities as their local currencies will be able to purchase more product in dollar terms.

They continued, “The path of commodities will be heavily influenced by what the United States Federal Reserve does. If the Federal Reserve stays tight and keeps the dollar strong, that’s probably not so good for commodities.

However, if the Fed is as dovish as everyone else or more dovish (it doesn’t look like it’s gonna be the case right now), that would weaken the dollar and would probably be good for commodities, assuming that there’s not some major economic downturn that’s causing those rates to come down like that.”

ETFs

In summation, it looks like we are not yet at the starting line of the commodities super cycle, but we may get there in the next couple of years. With this in our back pocket, we asked the McAlinden team if they had any ETFs they thought might be impacted.

“Unfortunately, things have gotten harder for equity investors trying to acquire commodities exposure,” they said. “Last year, 21 commodity ETNs were actually closed out by Barclays.” These covered most commodities across the board, and some of the pure plays that just focused on one commodity, like cocoa, had been some of the highest returning ones.”

Still, the team had a handful of solid commodity-focused ETFs they were looking at.

 Invesco’s family of funds is one of these that covered a pretty broad allocation of commodities.

Another is  Invesco DB Commodity Index Tracking Fund (DBC:NYSEARCA), though McAlindnen shared more segmented ETFs such as Invesco DB Agriculture Fund (DBA:NYSEARCA) for ags as well.

“These are the kinds of the products that we’re looking at to represent the performance of some kind of ideas that we might highlight as themes at some point,” they said.

Continuing on with their list, they shared mining ETFs such as Global X Copper Miners ETF (COPX:NYSEARCA) and VanEck Gold Miners ETF (GDX:NYSEARCA:).

As for energy, they pointed out Invesco DB Oil Fund (DBO:NYSEARCA), Energy Select Sector SPDR Fund (XLE:NYSEARCA), and Sprott Uranium Miners ETF (URNM:NYSEARCA).

 

Important Disclosures:

  1. Katherine DeGilio wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
  2.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

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McAlinden Research Partners Disclosures
This report has been prepared solely for informational purposes and is not an offer to buy/sell/endorse or a solicitation of an offer to buy/sell/endorse Interests or any other security or instrument or to participate in any trading or investment strategy. No representation or warranty (express or implied) is made or can be given with respect to the sequence, accuracy, completeness, or timeliness of the information in this Report. Unless otherwise noted, all information is sourced from public data.
McAlinden Research Partners is a division of Catalpa Capital Advisors, LLC (CCA), a Registered Investment Advisor. References to specific securities, asset classes and financial markets discussed herein are for illustrative purposes only and should not be interpreted as recommendations to purchase or sell such securities. CCA, MRP, employees and direct affiliates of the firm may or may not own any of the securities mentioned in the report at the time of publication.

Energy Opinions
23 Apr

Are tomorrow’s engineers ready to face AI’s ethical challenges?

By Elana Goldenkoff, University of Michigan and Erin A. Cech, University of Michigan 

A chatbot turns hostile. A test version of a Roomba vacuum collects images of users in private situations. A Black woman is falsely identified as a suspect on the basis of facial recognition software, which tends to be less accurate at identifying women and people of color.

These incidents are not just glitches, but examples of more fundamental problems. As artificial intelligence and machine learning tools become more integrated into daily life, ethical considerations are growing, from privacy issues and race and gender biases in coding to the spread of misinformation.

The general public depends on software engineers and computer scientists to ensure these technologies are created in a safe and ethical manner. As a sociologist and doctoral candidate interested in science, technology, engineering and math education, we are currently researching how engineers in many different fields learn and understand their responsibilities to the public.

Yet our recent research, as well as that of other scholars, points to a troubling reality: The next generation of engineers often seem unprepared to grapple with the social implications of their work. What’s more, some appear apathetic about the moral dilemmas their careers may bring – just as advances in AI intensify such dilemmas.

Aware, but unprepared

As part of our ongoing research, we interviewed more than 60 electrical engineering and computer science masters students at a top engineering program in the United States. We asked students about their experiences with ethical challenges in engineering, their knowledge of ethical dilemmas in the field and how they would respond to scenarios in the future.

First, the good news: Most students recognized potential dangers of AI and expressed concern about personal privacy and the potential to cause harm – like how race and gender biases can be written into algorithms, intentionally or unintentionally.

One student, for example, expressed dismay at the environmental impact of AI, saying AI companies are using “more and more greenhouse power, [for] minimal benefits.” Others discussed concerns about where and how AIs are being applied, including for military technology and to generate falsified information and images.

When asked, however, “Do you feel equipped to respond in concerning or unethical situations?” students often said no.

“Flat out no. … It is kind of scary,” one student replied. “Do YOU know who I’m supposed to go to?”

Another was troubled by the lack of training: “I [would be] dealing with that with no experience. … Who knows how I’ll react.”

Other researchers have similarly found that many engineering students do not feel satisfied with the ethics training they do receive. Common training usually emphasizes professional codes of conduct, rather than the complex socio-technical factors underlying ethical decision-making. Research suggests that even when presented with particular scenarios or case studies, engineering students often struggle to recognize ethical dilemmas.

‘A box to check off’

Accredited engineering programs are required to “include topics related to professional and ethical responsibilities” in some capacity.

Yet ethics training is rarely emphasized in the formal curricula. A study assessing undergraduate STEM curricula in the U.S. found that coverage of ethical issues varied greatly in terms of content, amount and how seriously it is presented. Additionally, an analysis of academic literature about engineering education found that ethics is often considered nonessential training.

Many engineering faculty express dissatisfaction with students’ understanding, but report feeling pressure from engineering colleagues and students themselves to prioritize technical skills in their limited class time.

Researchers in one 2018 study interviewed over 50 engineering faculty and documented hesitancy – and sometimes even outright resistance – toward incorporating public welfare issues into their engineering classes. More than a quarter of professors they interviewed saw ethics and societal impacts as outside “real” engineering work.

About a third of students we interviewed in our ongoing research project share this seeming apathy toward ethics training, referring to ethics classes as “just a box to check off.”

“If I’m paying money to attend ethics class as an engineer, I’m going to be furious,” one said.

These attitudes sometimes extend to how students view engineers’ role in society. One interviewee in our current study, for example, said that an engineer’s “responsibility is just to create that thing, design that thing and … tell people how to use it. [Misusage] issues are not their concern.”

One of us, Erin Cech, followed a cohort of 326 engineering students from four U.S. colleges. This research, published in 2014, suggested that engineers actually became less concerned over the course of their degree about their ethical responsibilities and understanding the public consequences of technology. Following them after they left college, we found that their concerns regarding ethics did not rebound once these new graduates entered the workforce.

Joining the work world

When engineers do receive ethics training as part of their degree, it seems to work.

Along with engineering professor Cynthia Finelli, we conducted a survey of over 500 employed engineers. Engineers who received formal ethics and public welfare training in school are more likely to understand their responsibility to the public in their professional roles, and recognize the need for collective problem solving. Compared to engineers who did not receive training, they were 30% more likely to have noticed an ethical issue in their workplace and 52% more likely to have taken action.

Over a quarter of these practicing engineers reported encountering a concerning ethical situation at work. Yet approximately one-third said they have never received training in public welfare – not during their education, and not during their career.

This gap in ethics education raises serious questions about how well-prepared the next generation of engineers will be to navigate the complex ethical landscape of their field, especially when it comes to AI.

To be sure, the burden of watching out for public welfare is not shouldered by engineers, designers and programmers alone. Companies and legislators share the responsibility.

But the people who are designing, testing and fine-tuning this technology are the public’s first line of defense. We believe educational programs owe it to them – and the rest of us – to take this training seriously.The Conversation

About the Author:

Elana Goldenkoff, Doctoral Candidate in Movement Science, University of Michigan and Erin A. Cech, Associate Professor of Sociology, University of Michigan

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Opinions Programming
23 Apr
coffee_beans

Robusta Coffee: hovers near record highs!

By ForexTime 

  • FXTM launches 10 new commodities
  • Robusta Coffee near all-time high
  • 2nd biggest gainer YTD in FXTM’s commodity universe
  • Prices ↑ over 35% since start of 2024
  • Key levels of interest at $4040, $4130 and $4280

FXTM’s new Robusta Coffee commodity is flirting near all-time highs!

Prices rallied to fresh records last week as fundamentals fuelled concerns over tight global supplies.

Note: Prices are trading roughly 4% away from all-time highs.

Before we take a deep dive into the world of Robusta coffee, here are the basics:

What is Robusta Coffee?

Robusta coffee bean is often used for expresso-based drinks and accounts for roughly 40% of the world’s coffee production.

What does FXTM’s Robusta Coffee track?

FXTM’s Robusta Coffee tracks the ICE US Robusta Coffee futures, the world benchmark for producers of Robusta coffee.

Coffee of this variety is grown mainly in Vietnam, Brazil, Indonesia, Uganda and India.

The lowdown…

Robusta coffee prices have been on a tear!

The commodity has gained over 35% since the start of 2024 thanks to fundamental forces.

Negative factors in the form of severe weather, aging trees and freight disruptions continue to fuel fears about a global shortage of this coffee variety.

This in turn has sparked panic buying by roasters, further fuelling Robusta’s upside gains.

The bigger picture

Vietnam is the world’s largest producer of Robusta, accounting for roughly 35% of global output.

Heatwaves and ageing trees are expected to hit crop yields, with concerns rising over possible water shortages for irrigation hurting output of the next season.

Brazil, the world’s second-largest producer of Robusta is also facing its trials. Adverse weather conditions are also threatening output, for the country that produces around 28% of global output.

Essentially, there are concerns over the amount of Robusta left in Brazil as the 2024 harvest approaches.

What does this mean?

A combination of negative factors continues to impact output from the world’s two largest producers of Robusta coffee.

This development could mean more gains for the commodity which is trading near all-time highs.

And…the technicals

Prices seem to be in a range on the H1 charts with support around $4130 and resistance at $4280.

Although the path of least resistance points north, a move lower could be on the cards before bulls jump back into the scene.

Potential support levels can be found at $4130, $4040 and $3980.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Opinions Soft Commodities
22 Apr

Trade Of The Week: Are Ethereum ETF’s coming?

By ForexTime 

  • Bitcoin halving done and dusted
  • Ethereum in focus ahead of SEC decision
  • ETH ↓ 20% from 2024 peak
  • Prices trending higher on D1 chart
  • Key levels at 100 day SMA, $3255 and 50-day SMA

Bitcoin’s halving event is done and dusted! Marking a landmark moment in the world of digital assets.

This shifts our focus towards Ethereum which could be rocked by the Securities and Exchange Commission’s (SEC) looming decision to vote on Ethereum spot ETF applications.

The world’s second-largest cryptocurrency has shed over 20% from the 2024 high, though still up 40% year-to-date.

Fun fact: Ethereum hit an all-time high of $4866.4 in November 2021.

The lowdown 

One of the key forces supporting Ethereum in Q1 was growing anticipation over a green light from the SEC on May 23rd following the spot Bitcoin ETF approval in January.

Fast-forward to today, confidence has significantly declined over the SEC approving the ETF applications.

The bigger picture 

Just like we have seen with Bitcoin ETFs, the approval of an Ethereum ETF would increase exposure to the cryptocurrency.

It will provide easier and greater access to the world’s second-largest digital currency without having to own it – representing potential inflows of new investors.

Where we are now

Much has changed since the start of 2024 with the lack of engagement between the SEC and applicants sapping confidence over the possibility of an approval on May 23rd.

On top of this, recent news about the SEC investigating companies associated with the Ethereum Foundation adds another layer of uncertainty ahead of the decision.

A bright spot 

Hong Kong regulators have recently approved Bitcoin and Ethereum ETFs, marking another positive step towards mainstream acceptance.

Such a development could spark acceptance from other regulators in Asia and across the world.

What does this all mean?

In a nutshell, Ethereum prices could turn volatile over the next few weeks as the SEC decision looms.

Where there is volatility, this presents potential trading opportunities.

How to take advantage of this

There are 2 potential outcomes to the SEC’s spot ETF decision on May 23rd.

    1) SEC rejects all Ethereum ETF applications.

This seems to be the expected outcome for markets with the approval seen later in the year or even 2025. Nevertheless, the initial disappointment could hit Ethereum prices – capping upside gains from other forces.

    2) SEC approves Ethereum ETF applications.

This decision may catch markets by surprise, triggering an aggressive appreciation in Ethereum prices due to the prospects of fresh inflows from retail and institutional investors.

What about the technicals?

The technicals paint a mixed picture on the daily charts. Although Ethereum is respecting a bearish channel, support can be found at $2855 and the 100-day Simple Moving Average.

  • A solid breakout and daily close above $3255 may open a path toward the 50-day SMA at $3475 and $3724.
  • Should prices slip back below the 100-day SMA at $3063.8, this could open a path back towards $2855. A solid bearish move under $2855, could fuel a further selloff towards the 200-day SMA.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Cryptocurrencies Opinions
21 Apr

Speculators strongly boosting US Dollar bets vs Major Currencies

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday April 16th and shows a quick view of how large market participants (for-profit speculators and commercial traders) 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 euro will decline versus the dollar.

Weekly Speculator Changes led by Brazilian Real & New Zealand Dollar

The COT currency market speculator bets were lower this week as just three out of the eleven currency markets we cover had higher positioning while the other eight markets had lower speculator contracts.

Leading the gains for the currency markets was the Brazilian Real (3,517 contracts) with the New Zealand Dollar (1,821 contracts) and the US Dollar Index (213 contracts) also showing positive weeks.

The currencies seeing declines in speculator bets on the week were the Canadian Dollar (-29,430 contracts), the EuroFX (-20,499 contracts), the British Pound (-19,633 contracts), the Mexican Peso (-11,960 contracts), the Australian Dollar (-8,742 contracts), the Swiss Franc (-4,448 contracts), the Japanese Yen (-3,468 contracts) and with Bitcoin (-210 contracts) also registering lower bets on the week.

Speculators strongly boosting US Dollar bets vs Major Currencies

Highlighting the COT currency’s data this week is the overall strength being shown in the speculator’s positioning for the US dollar.

The way the futures markets work for currencies is that every bet for or against a currency is also a bet for against the US dollar. Right now, most of the major currencies are strongly on the defensive in their exchange rates and, especially, in their speculator positions versus the US dollar, underlining the strength of the sentiment for the US currency.

Here are current highlights of the major currencies weakness (US dollar strength):

First up, the Australian dollar (AUD) speculator position is currently over -100,000 contracts for the fourth time out of the last 5 weeks. The all-time record low was reached just last month on March 19th at a total of -107,538 contracts.

The British pound sterling (GBP) contracts have now fallen for four out of the last 5 weeks with the contract level currently at its lowest point since November.

The euro (EUR) currency contracts have decreased in four of the last five weeks as well. The current level is barely positive (+12,224 contracts), falling rapidly (started the year over +100,000 contracts) and now at the lowest level since 2022.

The Japanese yen (JPY) contracts continued to fall this week and have dropped in 13 out of the last 14 weeks. At a total of -165,619 contracts, the current position is at a new lowest standing since 2007.

The Swiss franc (CHF) position has been falling sharply as well. The speculative position for the franc has now declined for 11 consecutive weeks and is at the lowest level since 2019 at -36,212 contracts.

Finally, the Canadian dollar (CAD) has fallen for eight consecutive weeks with a drop this week of -29,430 contracts. The total decrease over just the last 8 weeks has amounted to approximately -82,000 contracts and has brought the current speculative level to the lowest point since 2017.

Helping to keep the US dollar strong is the fading expectations of multiple rate cuts from the Federal Reserve. Inflation levels continue to persist in a growing US economy, putting a dent into this year’s rate cut narrative and giving the USD an interest-rate differential boost against it’s major currency counterparts.

The exchange rates of the major currencies are also in a current short-term downtrend vs the USD. The AUD, NZD, GBP, EUR and CHF exchange rates all have dipped this week to the lowest levels since October or November in the latest spot trading data. The JPY, meanwhile, is currently trading at the lowest levels in 34-years.

Currencies Net Speculators Leaderboard

Legend: Weekly Speculators Change | Speculators Current Net Position | Speculators Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by Mexican Peso & Bitcoin

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the Mexican Peso (94 percent) and the Bitcoin (61 percent) lead the currency markets this week. The British Pound (59 percent) comes in as the next highest in the weekly strength scores.

On the downside, the Canadian Dollar (0 percent), the Swiss Franc (0 percent), the Japanese Yen (0 percent), the US Dollar Index (3 percent) and the Australian Dollar (6 percent) come in at the lowest strength levels currently and are all in Extreme-Bearish territory (below 20 percent).

Strength Statistics:
US Dollar Index (2.9 percent) vs US Dollar Index previous week (2.5 percent)
EuroFX (25.5 percent) vs EuroFX previous week (34.2 percent)
British Pound Sterling (59.0 percent) vs British Pound Sterling previous week (72.0 percent)
Japanese Yen (0.0 percent) vs Japanese Yen previous week (2.4 percent)
Swiss Franc (0.0 percent) vs Swiss Franc previous week (8.9 percent)
Canadian Dollar (0.0 percent) vs Canadian Dollar previous week (22.4 percent)
Australian Dollar (5.8 percent) vs Australian Dollar previous week (13.7 percent)
New Zealand Dollar (27.1 percent) vs New Zealand Dollar previous week (21.9 percent)
Mexican Peso (94.1 percent) vs Mexican Peso previous week (100.0 percent)
Brazilian Real (35.4 percent) vs Brazilian Real previous week (30.8 percent)
Bitcoin (60.9 percent) vs Bitcoin previous week (64.1 percent)

Bitcoin & Mexican Peso top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that Bitcoin (15 percent) and the Mexican Peso (10 percent) lead the past six weeks trends for the currencies and are the only markets with positive trends at the moment.

The New Zealand Dollar (-54 percent) leads the downside trend scores currently with the Canadian Dollar (-48 percent), Swiss Franc (-37 percent) and the British Pound (-33 percent) following next with lower trend scores.

Strength Trend Statistics:
US Dollar Index (-8.5 percent) vs US Dollar Index previous week (-6.8 percent)
EuroFX (-23.0 percent) vs EuroFX previous week (-12.8 percent)
British Pound Sterling (-33.0 percent) vs British Pound Sterling previous week (-12.0 percent)
Japanese Yen (-32.1 percent) vs Japanese Yen previous week (-20.2 percent)
Swiss Franc (-37.5 percent) vs Swiss Franc previous week (-39.8 percent)
Canadian Dollar (-47.9 percent) vs Canadian Dollar previous week (-39.5 percent)
Australian Dollar (-14.8 percent) vs Australian Dollar previous week (-11.9 percent)
New Zealand Dollar (-53.8 percent) vs New Zealand Dollar previous week (-67.0 percent)
Mexican Peso (10.4 percent) vs Mexican Peso previous week (22.5 percent)
Brazilian Real (-9.6 percent) vs Brazilian Real previous week (-26.2 percent)
Bitcoin (14.9 percent) vs Bitcoin previous week (27.3 percent)

Individual COT Forex Markets:

US Dollar Index Futures:

US Dollar Index Forex Futures COT ChartThe US Dollar Index large speculator standing this week resulted in a net position of -929 contracts in the data reported through Tuesday. This was a weekly gain of 213 contracts from the previous week which had a total of -1,142 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 2.9 percent. The commercials are Bullish-Extreme with a score of 97.9 percent and the small traders (not shown in chart) are Bearish with a score of 37.2 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: New Buy – Long Position.

US DOLLAR INDEX StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:67.918.210.4
– Percent of Open Interest Shorts:70.021.25.4
– Net Position:-929-1,3092,238
– Gross Longs:29,9118,0404,596
– Gross Shorts:30,8409,3492,358
– Long to Short Ratio:1.0 to 10.9 to 11.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):2.997.937.2
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-8.55.615.9

 

Euro Currency Futures:

Euro Currency Futures COT ChartThe Euro Currency large speculator standing this week resulted in a net position of 12,224 contracts in the data reported through Tuesday. This was a weekly decrease of -20,499 contracts from the previous week which had a total of 32,723 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 25.5 percent. The commercials are Bullish with a score of 78.5 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 5.2 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

EURO Currency StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:27.260.111.2
– Percent of Open Interest Shorts:25.364.48.7
– Net Position:12,224-28,65416,430
– Gross Longs:178,912395,97973,794
– Gross Shorts:166,688424,63357,364
– Long to Short Ratio:1.1 to 10.9 to 11.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):25.578.55.2
– Strength Index Reading (3 Year Range):BearishBullishBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-23.025.5-22.4

 

British Pound Sterling Futures:

British Pound Sterling Futures COT ChartThe British Pound Sterling large speculator standing this week resulted in a net position of 8,619 contracts in the data reported through Tuesday. This was a weekly decline of -19,633 contracts from the previous week which had a total of 28,252 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 59.0 percent. The commercials are Bearish with a score of 47.3 percent and the small traders (not shown in chart) are Bearish with a score of 35.3 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

BRITISH POUND StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:31.356.69.5
– Percent of Open Interest Shorts:27.555.414.5
– Net Position:8,6192,972-11,591
– Gross Longs:71,800129,95721,721
– Gross Shorts:63,181126,98533,312
– Long to Short Ratio:1.1 to 11.0 to 10.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):59.047.335.3
– Strength Index Reading (3 Year Range):BullishBearishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-33.037.6-34.0

 

Japanese Yen Futures:

Japanese Yen Forex Futures COT ChartThe Japanese Yen large speculator standing this week resulted in a net position of -165,619 contracts in the data reported through Tuesday. This was a weekly reduction of -3,468 contracts from the previous week which had a total of -162,151 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bullish with a score of 75.9 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

JAPANESE YEN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:14.969.713.7
– Percent of Open Interest Shorts:65.019.014.3
– Net Position:-165,619167,742-2,123
– Gross Longs:49,463230,64245,373
– Gross Shorts:215,08262,90047,496
– Long to Short Ratio:0.2 to 13.7 to 11.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):0.0100.075.9
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-32.136.0-23.4

 

Swiss Franc Futures:

Swiss Franc Forex Futures COT ChartThe Swiss Franc large speculator standing this week resulted in a net position of -36,212 contracts in the data reported through Tuesday. This was a weekly decline of -4,448 contracts from the previous week which had a total of -31,764 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 1.1 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

SWISS FRANC StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:15.774.310.0
– Percent of Open Interest Shorts:54.417.627.9
– Net Position:-36,21252,956-16,744
– Gross Longs:14,65069,4129,349
– Gross Shorts:50,86216,45626,093
– Long to Short Ratio:0.3 to 14.2 to 10.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):0.0100.01.1
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-37.538.8-23.3

 

Canadian Dollar Futures:

Canadian Dollar Forex Futures COT ChartThe Canadian Dollar large speculator standing this week resulted in a net position of -82,815 contracts in the data reported through Tuesday. This was a weekly fall of -29,430 contracts from the previous week which had a total of -53,385 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 0.0 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 3.4 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

CANADIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:15.670.211.6
– Percent of Open Interest Shorts:50.531.715.3
– Net Position:-82,81591,572-8,757
– Gross Longs:37,067166,83427,645
– Gross Shorts:119,88275,26236,402
– Long to Short Ratio:0.3 to 12.2 to 10.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):0.0100.03.4
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-47.939.1-11.2

 

Australian Dollar Futures:

Australian Dollar Forex Futures COT ChartThe Australian Dollar large speculator standing this week resulted in a net position of -101,083 contracts in the data reported through Tuesday. This was a weekly lowering of -8,742 contracts from the previous week which had a total of -92,341 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 5.8 percent. The commercials are Bullish-Extreme with a score of 99.1 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 15.7 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

AUSTRALIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:18.072.17.7
– Percent of Open Interest Shorts:61.122.614.2
– Net Position:-101,083116,344-15,261
– Gross Longs:42,365169,33418,142
– Gross Shorts:143,44852,99033,403
– Long to Short Ratio:0.3 to 13.2 to 10.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):5.899.115.7
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-14.814.9-10.7

 

New Zealand Dollar Futures:

New Zealand Dollar Forex Futures COT ChartThe New Zealand Dollar large speculator standing this week resulted in a net position of -11,726 contracts in the data reported through Tuesday. This was a weekly lift of 1,821 contracts from the previous week which had a total of -13,547 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 27.1 percent. The commercials are Bullish with a score of 76.2 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 17.5 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

NEW ZEALAND DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:28.765.55.2
– Percent of Open Interest Shorts:47.342.49.7
– Net Position:-11,72614,570-2,844
– Gross Longs:18,01941,1953,272
– Gross Shorts:29,74526,6256,116
– Long to Short Ratio:0.6 to 11.5 to 10.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):27.176.217.5
– Strength Index Reading (3 Year Range):BearishBullishBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-53.854.6-43.9

 

Mexican Peso Futures:

Mexican Peso Futures COT ChartThe Mexican Peso large speculator standing this week resulted in a net position of 127,731 contracts in the data reported through Tuesday. This was a weekly decline of -11,960 contracts from the previous week which had a total of 139,691 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 94.1 percent. The commercials are Bearish-Extreme with a score of 5.9 percent and the small traders (not shown in chart) are Bearish with a score of 39.2 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

MEXICAN PESO StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:60.336.72.6
– Percent of Open Interest Shorts:15.782.81.0
– Net Position:127,731-132,1194,388
– Gross Longs:172,573105,0287,388
– Gross Shorts:44,842237,1473,000
– Long to Short Ratio:3.8 to 10.4 to 12.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):94.15.939.2
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:10.4-9.3-11.1

 

Brazilian Real Futures:

Brazil Real Futures COT ChartThe Brazilian Real large speculator standing this week resulted in a net position of 901 contracts in the data reported through Tuesday. This was a weekly increase of 3,517 contracts from the previous week which had a total of -2,616 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 35.4 percent. The commercials are Bullish with a score of 65.3 percent and the small traders (not shown in chart) are Bearish with a score of 41.0 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

BRAZIL REAL StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:60.730.94.7
– Percent of Open Interest Shorts:59.233.63.5
– Net Position:901-1,605704
– Gross Longs:35,81218,2032,752
– Gross Shorts:34,91119,8082,048
– Long to Short Ratio:1.0 to 10.9 to 11.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):35.465.341.0
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-9.612.2-20.3

 

Bitcoin Futures:

Bitcoin Crypto Futures COT ChartThe Bitcoin large speculator standing this week resulted in a net position of -363 contracts in the data reported through Tuesday. This was a weekly fall of -210 contracts from the previous week which had a total of -153 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 60.9 percent. The commercials are Bullish with a score of 56.7 percent and the small traders (not shown in chart) are Bearish with a score of 28.3 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

BITCOIN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:75.75.15.2
– Percent of Open Interest Shorts:76.96.22.9
– Net Position:-363-313676
– Gross Longs:22,3391,5131,532
– Gross Shorts:22,7021,826856
– Long to Short Ratio:1.0 to 10.8 to 11.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):60.956.728.3
– Strength Index Reading (3 Year Range):BullishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:14.9-19.7-4.9

 

Article By InvestMacro – Receive our weekly COT Newsletter

*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) 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) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

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