Currency Markets

Currency Weekly September 4, 2022

Sep 4, 2022

Thomas Thornton

Welcome to the Hedge Fund Telemetry Currency Weekly note! We are excited about this 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. Our subscribers have urged us to launch this stand-alone research product offering for a while. We also launched a Commodity Weekly with a similar analysis. These research weekly reports 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. These reports are included in your subscription for “small institutions” and “large institutions” subscribers.

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. FOR THOSE THAT HAVE ALREADY SIGNED UP THANK YOU

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 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 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 considered 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, comprises hedge funds, mutual funds, and commodity trading advisors. These speculative traders 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 US Dollar strength has continued; however, there is a DeMark Sequential sell Countdown 13 worth watching as well EURUSD is on day 12 of 13. Bitcoin remains with nothing to do.

Currency Sentiment Overview

Currency sentiment highlights

US Dollar Indexes

DXY US Dollar Index daily might be the big news if the DeMark Sequential will reverse after the sell Countdown 13. The trend has been persistent and will take a lot of turn it lower.

Bloomberg US Dollar Index daily does not have a Sequential Countdown on the upside but rather one pending on the downside. This could very well cancel above the TDST and/or completion of Setup 9

US Dollar bullish sentiment remains in the extreme zone over 80%

US Dollar Commitment of Traders

Bitcoin and Ethereum

Bitcoin Daily still nothing to do here

Bitcoin Bullish Sentiment remains under pressure

Ethereum Daily faded after the Aggressive Sequential 13 (amber)

Major USD Crosses

EURUSD Euro / US Dollar could see the buy Countdown 13 this week

Euro bullish sentiment remains under pressure

Euro Commitment of Traders

GBPUSD British Pound Sterling / US Dollar continues lower

British Pound Sterling bullish sentiment is oversold still

British Pound Sterling Commitment of Traders

AUDUSD Australian Dollar / US Dollar

Australian Dollar bullish sentiment remains under pressure

Australian Dollar Commitment of Traders

USDCAD US Dollar / Canadian Dollar

Canadian Dollar bullish sentiment getting oversold

Canadian Dollar Commitment of Traders

USDCHF US Dollar / Swiss Franc

Swiss Franc bullish sentiment continues to fade

Swiss Franc Commitment of Traders

USD / JPY +140 !

Japanese Yen Bullish Sentiment back to the lows

Japnese Yen Commitment of Traders

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

Brazilian Real Commitment of Traders

USDMXN US Dollar / Mexican Peso

Mexican Peso bullish sentiment steady

Mexican Peso Commitment of Traders

USDZAR US Dollar / South African Rand

USDCNH US Dollar / Chinese Offshore Renminbi (Yuan)

DeMark Sequential Basics from Bloomberg

More detailed Commitment of Traders explanation