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  1. #151

    Weekly CFTC COT Forex Positioning: The Greenback Reigns Supreme Once More

    Large speculators buttressed their bullish bias on the U.S. dollar, causing the value of net long bets on the Greenback to rise from $22.45 billion to $24.17 billion during the last week of December, according to calculations done by Reuters. And the latest Commitments of Traders forex positioning report from the CFTC reveals that the Greenback took ground mainly from the Swissy and the Japanese yen, while getting some push-back from the Loonie and the euro. Also, the Aussie finally succumbed to the Greenback after several months of resistance.

    [Only registered and activated users can see links. ]Important Forex News Daily.-1-png

    Lemme break down the latest numbers for y’all:

    With the Aussie’s defeat, the Greenback finally reigned supreme against ALL its peers once more. Bullish bias on the Greenback is still likely being fueled by the Fed’s decision to hike rates back in December while signalling 2-3 rate hikes in 2017, which is more than the 1-2 projected earlier.

    In addition, speculation on Trump’s fiscal policies is also still likely spurring demand for the Greenback. And it probably helped that the final estimate for Q3 U.S. GDP growth came in at 3.5% quarter-on-quarter (annualized), which is faster than the second estimate (3.2%) and the expected revision (3.3%), as well as a significant improvement over Q2’s 1.4% rate of expansion.

    Still, positioning activity wasn’t uniformly in the Greenback’s favor during the week ending on December 27, 2016. Although this was very likely due in part to year-end positioning by the large players.

    Anyhow, here is how positioning activity on the other currencies went down:

    EUR – Bearish bias on the euro eased for the fourth consecutive week, thanks to short euro bets getting trimmed by 2,816 contracts and euro long bets getting pumped up by 5,821 contracts.

    The increase in long bets and the simultaneous paring of short bets on the euro was probably a reaction to the announcement that Italy approved a bailout plan for its troubled banks, particularly Montei dei Paschi. Although it’s also possible the reduction in euro shorts was due to profit-taking after the euro’s bad run in 2016.

    GBP – Large speculators also reduced their net bearish bias on the pound for the fourth consecutive week. And this time, they did this by adding 5,910 fresh pound longs. This was offset a bit by the 3,659 increase in pound shorts.

    Easing bearish bias on the pound during the week ending on December 27, 2016 was likely still due to the BOE’s decision to sit on its hands and maintain a neutral policy bias during the December BOE Statement. And it probably helped that the final estimate for the U.K.’s Q3 GDP growth was revised higher from 0.5% quarter-on-quarter to 0.6%.

    JPY – The yen was pushed even deeper into bearish territory. However, a closer look at positioning activity shows that both yen bears and yen bulls were both paring their bets. It just so happens that more bulls were bailing out than bears, with yen longs getting slashed by 23,635 contracts versus the 12,075 fall in yen shorts.

    The stronger bearish bias on the yen was likely due to the risk-on vibes at the time, which sent equities higher. Another sign of the risk-on mood was the rise in U.S. bond yields, which market analysts attributed to stronger U.S. consumer confidence.

    CHF – After becoming net bullish during the previous week, large speculators became net bearish on the Swissy again, thanks to long bets on the Swissy getting cut down by 19,173 contracts. This was partially offset by the 1,972 reduction in Swissy shorts.

    The risk-on vibes that likely hurt demand for the safe-haven yen likely caused Swissy bulls to flee from the safe-haven Swissy as well.

    AUD – Large speculators have been net bullish on the Aussie since the week ending on July 5, 2016. That finally came to an end during the week ending on Dec. 27, 2016, thanks to short bets on the Aussie getting ramped up by 11,2016 contracts, which was partially offset by the 5,755 fresh Aussie longs.

    The relatively large increase in Aussie shorts was likely due to the slide in iron ore price at the time. Although longer-term fundamentals, namely the narrower interest rate differentials after the U.S. Fed hiked rates, were likely a factor as well. The increase in Aussie longs, meanwhile, was probably because of the risk-on vibes that I mentioned earlier, which stoked demand for the higher-yielding Aussie.

    NZD – Non-commercial forex traders became even more bearish on the Kiwi. Long bets on the Kiwi got trimmed by 2,865 contracts while short bets increased by 1,183 contracts.

    The increasing bearish bias on the Kiwi was likely due to expectations that narrower interest rate differentials between the U.S. and New Zealand would continue to pull away investors from New Zealand. Well, that’s what the RBNZ expects anyway, when RBNZ’s Wheeler said during the November RBNZ Statement that the Kiwi will fall, “reflecting an improvement in global economic conditions and a narrowing of interest rate differentials between New Zealand and other advanced economies.”

    CAD – Net bearish bets on the Loonie got drastically reduced, thanks to 14,351 fresh Loonie longs. Although this was partially offset by the 4,195 increase in Loonie short contracts.

    The large increase in Loonie longs was likely prompted by rising oil prices at the time, as well as speculation that oil will continue to rise in 2017, amid the OPEC and non-OPEC oil cut deals. As for the increase in Loonie shorts, that was probably because Canada released some rather disappointing top-tier economic reports during the week ending on December 27, 2016, such as Canada’s CPI falling by 0.4% month-on-month in November.

  2. #152

    Quick and Wacky Predictions for 2017

    It’s that time of the year, forex friends! The FX-Men did an eerily fantastic job at calling trends for 2016, so we decided to throw in even more wacky ideas for the year ahead. Check it out!
    Year of the dollar…again?

    The Fed is set to raise its interest rates multiple times in 2017, the U.S. equities markets is flirting with record highs, and U.S. incoming Prez. Trump is promising yuuuuuge fiscal stimulus injections. Is it any wonder that the Greenback is the top bet for many traders going into the year?

    Don’t expect a smooth ride on the way to the sky, though. Just ask SpaceX. Remember that much of the optimism is based on Trumponomics and the Fed’s hawkishness. And as we know, the Fed can be a tad bit too hawkish with their end-of-year forecasts. The euphoria of Trumponomics could also fade especially the timelines are hit with unexpected push back from Congress despite Republican control.

    Strong rally or not, you can bet your next pips that the dollar will continue to be one of the most closely-watched currencies this year. Make sure you stick around so you won’t miss any monster move!
    New lows for EUR and GBP

    Family dramas don’t end with the filing for divorce and Brexit is no exception. The euro zone’s perpetual banking crisis, for example, would have more impact on the euro now that the option of leaving the EU is now more realistic than it was a year ago.

    Europe’s policymaking scene could also rock the common currency this year. Imagine if an early election in Italy puts in power the 5 Star Movement or some other eurosceptic party, while Le Pen’s Front National wins in France and Alternative for Germany ousts Merkel from power. The heads of these anti-EU parties could form the first Anti-EU triumvirate and cause more uncertainty in the markets!

    The U.K. is also not without its headaches. Already Theresa May’s Brexit schedule is threatened by legal challenges that could prolong its bitter divorce with the EU. Unless May and the EU officials hammer out details soon, the continued uncertainty will likely give Mark Carney (and GBP traders) jitters in the months to come.
    Oil will breach the $100/barrel mark

    Thanks to the Organization of Petroleum Exporting Countries (OPEC) finally marshalling its troops and non-OPEC bigwigs like Russia making it their New Year’s resolution to cut their production, oil has found the momentum it needs to stay above its 2016 lows.

    There are many reasons why oil prices will stay low, of course, but given how OPEC and Russia have handled their oil-bullish rhetoric all through 2016 and the possible supply disruptions during a civil war, the odds are looking favorable for more oil price rallies. Somebody call the inflation junkies!

    That’s it for the markets…for now. Let’s take a look the FX-Men’s wacky predictions that made the cut this year:

    1. We’ll see the first Snapchat story from space. If we’re lucky, we’ll see aliens. If we’re REALLY lucky, we’ll see aliens using the dog filter.

    2. Tay-tay will come out with a new album. Swifties will come out of the woodwork and rejoice when Taylor introduces her new beau later in the year. It’s a long-term relationship that lasts more than six months.

    3. President Trump will have a Twitter war with…Kanye. Kanye will make a diss track about the Donald, and the Donald will have Kanye (and maybe the Kardashians) deported to the Republic of Kim, Kanye, and the Kardashians.

    4. Rise of “non-traditional” media. Traditional news outlets will be replaced by more popular options like The Onion, 21 Jump Street Journal, and Harambe Today.

    5. Smart home tech will become more popular. Because everybody secretly wants to be Iron Man. Thanks to Zuck, we’re now a few steps closer to having our own Jarvis. One small step for man, one giant leap for literally ordering pizza without lifting a finger.

    6. Another celebrity couple will head to Splitsville. Please don’t let it be John Legend and Chrissy Teigen. Or Ryan Reynolds and Blake Lively. Or Miley and Liam.

    There ya have it, folks! These are some of our wacky, and completely ridiculous predictions for 2017, but we’re curious to find out your own forex or pop culture predictions.

    Leave your thoughts in the comment boxes below and check out our poll

  3. #153

    European Open Briefing

    European Open Briefing

    Global Markets:
    Asian stock markets: Shanghai Composite gained 0.70 %, Hang Seng rose 0.65 %, ASX 200 rallied 1.10 %, Nikkei closed for holiday
    Commodities: Gold at $1158 (+0.55 %), Silver at $16.15 (+1.00 %), WTI Oil at $54.10 (+0.65 %), Brent Oil at $57.20 (+0.60 %)
    Rates: US 10-year yield at 0.19, UK 10-year yield at 1.24, German 10-year yield at 0.19


    News & Data:
    China Caixin Mfg PMI (Dec): 51.9 (est 50.7, prev 50.9)
    Australia AIG Manufacturing PMI (Dec): 55.4 (est 52.2, prev 54.2)
    Australia House Price Index MoM (Dec): 1.4% (prev 0.2%)
    Singapore GDP (YoY) Q4 P: 1.8% (est 0.60%, prev rev 1.20%)
    Singapore GDP (QoQ) Q4 P: 9.1% (est 3.70%, prev rev -1.90%)
    PBOC fixes yuan @ 6.9498 (prev fix 6.9370, prev close 6.9467)
    China economy is expected to grow around 6.5% in 2017 — Sec News
    Asia stocks edge up in positive start to 2017, dollar resumes climb – RTRS
    Oil prices rise as markets eye OPEC, non-OPEC production cuts – RTRS
    Dollar holds firm, upbeat China data lifts Aussie – RTRS
    China's economy could grow 6.5 percent in 2017; devaluation could stabilize yuan: think tank – RTRS


    Markets Update:
    The US Dollar retraced some of its gains from yesterday and the commodity currencies rallied, amid an improvement in risk appetite. In Asia, all the major stock indices are up on the day, led by Australia's ASX 200, which gained more than 1 %.
    EUR/USD rose from 1.0450 to 1.0490, and GBP/USD from 1.2270 to 1.2305 as the risk-on sentiment brought the Dollar under pressure. This was more noticeable in the commodity currencies, as AUD/USD rallied from 0.7180 to 0.7235 (+0.70 %) and NZD/USD from 0.6920 to 0.6975 (+0.75 %).
    Oil prices rose as well, as the major oil producing countries have started to cut their output. Precious metals rallied in Asia, with Gold reaching $1158 (from a low of $1149) and Silver breaking back above the $16.00 level.
    Upcoming Events:
    07:45 GMT – French CPI
    08:55 GMT – German Unemployment Rate
    09:30 GMT – UK Manufacturing PMI
    13:00 GMT – German CPI
    14:45 GMT – US Markit Manufacturing PMI
    15:00 GMT – US ISM Manufacturing PMI

  4. #154

    Eur/usd

    Sharp setback from the 1.0653 high of last week below the 1.0500 level see the 1.0425/00 area to watch. Below this will expose the 1.0372 and 1.0352 lows to retest. Upside see lift above the 1.0500 level needed to clear the way for retest of the 1.0600 level then 1.0653 high. [PL]

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  5. #155

    Usd/chf

    Rebound from the spike low at 1.0064 last week to regain the 1.0200 level seen easing the downside pressure. However, the downside still vulnerable and break will expose the 1.0145 support then 1.0064 lows to retest. Resistance is at 1.0250/65 area and the 1.0300 level. Would need lift over the latter to expose 1.0320/44 highs to retest. [PL]

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  6. #156

    Usd/jpy

    Staging recovery from the 116.05 low of last week but still shy of the 118.00 level. Would need to regain this to clear the way for retest of the 118.24 and 118.66 highs. While the latter caps, risk is seen for setback below the 117.00 level to expose the 116.55 and 116.05 lows to retest. [PL]

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  7. #157

    Eur/chf

    Pressure stays on the downside and break of the 1.0700 level will expose the 1.0679 then the 1.0624 low of last year to retest. Upside see resistance starting at 1.0762 then the 1.0790/1.0811 area. Only above the latter will fade downside pressure. [PL]

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  8. #158

    Gbp/usd

    Corrective upmove stalled by the 1.2388 high set last week with intraday trade now drifting in consolidation and lower break of 1.2200 strong support needed to revive the down-leg from 1.2775 high. [W.T]

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  9. #159

    Eur/gbp

    Backed off the .8668 spike high of last week but further strength not ruled out. Setback see support now at .8490 and .8450. Higher low sought for return to pressure the upside later to retest the .8600 level then .8668 high and where clearance will see room to the .8700/25 area. [PL]

    [Only registered and activated users can see links. ]Important Forex News Daily.-6-gif

  10. #160

    Euro May Overlook German CPI Uptick, US ISM Survey in Focus

    Talking Points:

    US Dollar corrects broadly lower as liquidity rebuilds after holidays
    Aussie Dollar outperforms on upbeat China PMI, NZ Dollar follows
    Euro may look past German inflation uptick, US ISM survey in focus

    The US Dollar corrected lower overnight having traded broadly higher against its major counterparts in yesterday. The Australian and New Zealand Dollars proved best-supported, which may reflect the two currencies’ allure as the highest yielders in the G10 FX space. This makes them natural alternatives to the greenback when an adverse shift in the Fed rate hike outlook undermines the US unit.

    The Aussie narrowly outperformed, finding a bit of an added boost in an upbeat Caixin China PMI reading. The report suggested manufacturing-sector activity growth accelerated to the fastest rate since January 2013. Supportive news flow from China – Australia’s largest trading partner – often boosts the latter country’s currency as traders weigh positive spillover possibilities.

    On balance, price action seen thus far since the beginning of the week seems to reflect returning liquidity after the holiday drain rather than a well-conceived response to specific news-flow. A degree of seesaw volatility is to be expected as traders return from year-end hibernation and reevaluate the landscape. With that in mind, it seems premature to expect follow-through on moves currently on offer.

    German CPI figures headline the economic calendar in European trading hours. The headline year-on-year inflation rate is expected to hit 1.4 percent, the highest in three years. The outcome may do little to boost the Euro however considering its limited implications for ECB monetary policy after the central bank committed to pursue QE through the remainder of 2017.

    Later in the day, we shall see December’s US manufacturing ISM survey is able to rekindle speculation about the on-coming FOMC policy trajectory in earnest. The report is expected to show that factory sector activity grew at the fastest pace in 23 months. With USD hovering near a 14-year high, prices may prove more sensitive to a downside surprise that dents confidence in the hawkish narrative versus the alternative.

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