Welcome to the Hedge Fund Telemetry Currency Weekly note! We are very excited about this new weekly note that will be a good overview of the major currency markets using our charts with DeMark analysis, charts of bullish sentiment, and the weekly Commitment of Traders data. We have been urged for a while by our subscribers to launch this stand-alone research product offering. We also launched a Commodity Weekly with similar analysis. Both of these new research weekly reports will require a separate subscription and as a current subscriber to Hedge Fund Telemetry, we have discounted the notes by 50%. These are available “a la carte” for a yearly rate of $500 each however we are offering them at $250 each. For “small institutions” and “large institutions” subscribers these reports are included in your subscription.
If you would like to sign up now (which would be most appreciated) here is the link to find the offerings. Your discount will apply at checkout.
There are also detailed explanations of Commitment of Trader data and a DeMark Sequential primer at the bottom of this note.
Commitment of Traders – The Basics
The Commitments of Traders (CoT) is a weekly report released by the Commodity Futures Trading Commission (CFTC). The CoT report outlines how different types of traders are positioned in the futures markets. There are two main types of traders in a CoT report: commercials and money managers.
Commercials are the actual producers and users of a commodity that use the futures markets to hedge. A commercial producer in the corn market could be a farmer who sells corn futures to lock in his selling price. Commercial traders are thought of as the “smart money” since they are in tune with the physical commodity business and likely have superior supply/demand information. The other main CoT trader type, money managers, is composed of hedge funds, mutual funds, and commodity trading advisors. These are speculative traders who have no interest in the underlying physical commodity business.
CoT data is most meaningful at extremes when either commercial traders or speculators are super net long or net short. The charts below are mostly self-explanatory by looking at the color-coded type of traders. For a more detailed explanation please see the bottom of this note.
Highlights and themes
The main theme with a strong US Dollar continues with extreme bullish sentiment combined with more DeMark exhaustion signals triggering. Yen crosses continue to show a weakening Yen across the board. European currencies are on the other end of the US Dollar also at extremes with a little more downside to get the DeMark buy signals triggering.
Currency Sentiment Overview
Currency sentiment highlights show the continued theme from the last 8 months of US Dollar strength. Other crosses are equally extreme on the other end. Bitcoin failed to continue higher after reaching a brief moment above 50% (the majority level)
US Dollar Indexes
DXY US Dollar Index daily now with another Combo sell Countdown 13
DXY US Dollar Index weekly
Bloomberg US Dollar Index daily
Bloomberg US Dollar Index weekly
US Dollar bullish sentiment has been and remains extreme. The 20 day moving average of bullish sentiment is making a new high too at 85%
US Dollar Commitment of Traders shows large speculators slightly decreasing long exposure
Bitcoin
Bitcoin Daily
Bitcoin bullish sentiment failed after lifting above the 50% level briefly.
Ethereum also breaking down now under the 50 day moving average
Major USD Crosses
EURUSD Euro / US Dollar
Euro bullish sentiment remains under severe pressure
Euro Commitment of Traders shows large speculators adding long exposure
GBPUSD British Pound Sterling / US Dollar
British Pound Sterling bullish sentiment remains under severe pressure
British Pound Sterling Commitment of Traders shows large speculators selling more
AUDUSD Australian Dollar / US Dollar
Australian Dollar bullish sentiment has backed off a good move and now at 50% it’s make or break
Australian Dollar Commitment of Traders shows large speculators buying more covering short exposure
USDCAD US Dollar / Canadian Dollar
Canadian Dollar bullish sentiment also starting to fail after a decent move making 1 year highs quickly.
Canadian Dollar Commitment of Traders shows large speculators adding more long exposure. Mostly neutral however
USDCHF US Dollar / Swiss Franc
Swiss Franc bullish sentiment is back to the lows seen twice in the last few months under 10%
Swiss Franc Commitment of Traders shows large speculators remaining short
RISK On Risk Off
This cross is often used as a risk-on / risk-off indicator
EURAUD Euro / Australian Dollar
Three major Yen crosses
EURJPY Euro / Japanese Yen
GBPJPY British Pound Sterling / Japanese Yen
AUDJPY Australian Dollar / Japanese Yen
US Dollar vs Emerging Markets
USDTRY US Dollar / Turkish Lira
USDBRL US Dollar / Brazilian Real
USDMXN US Dollar / Mexican Peso
Mexican Peso bullish sentiment has been strong
Mexican Peso Commitment of Traders shows large speculators adding long exposure
USDZAR US Dollar / South African Rand
USDCNH US Dollar / Chinese Offshore Renminbi (Yuan)
DeMark Sequential Basics from Bloomberg
More detailed Commitment of Traders explanation
