Latest CFTC Release Dated March 13th , 2007:
Dollar Implieds Turn Negative
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The charts used to interpret the Commitment of Traders data now include both net positioning and the percentile indicator. The percentile <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />indicator value is the current net positioning as a percentile when measured against the last 52 weeks. A 4 week moving average is applied to that number in order to smooth out the data. A reading above 90 indicates extreme bullishness and a reading below 0 extreme bearishness. Market turns occur at extreme levels of optimism and pessimism (bottoms at pessimism and tops at optimism). Therefore, readings below 10 on the percentile indicator give scope to bottom formation. Readings above 90 give scope to a topping formation.
US Dollar Index: Implied dollar positioning flipped to negative and the percentile indicator is decreasing from extreme levels. The bias from the COT data is bearish as dollar selling has been the trend since early February.
EUR: Euro net longs increased and the percentile indicator remains in extreme bullish territory (above 90%). The trend is euro bullish at the moment although bulls should exercise caution with the recent build up in long positions.
GBP: Long positioning continues to fall from the record levels set in January (when Cable hit 1.9915). The deterioration in long positions indicates a change in sentiment. The trend appears to be towards GBP selling now, thus we continue to favor the downside.
CHF: CHF net speculative positioning has increased a good amount the past 3 weeks from extremely bearish levels. The percentile indicator has rallied above 10, indicating that the CHF may begin to outperform the other currencies.
JPY: Yen positioning has also increased the past 3 weeks from record short levels. The interpretation is the same as that of the CHF. Look for the JPY to also outperform (decreasing Yen crosses).
CAD: CAD positioning has improved from record short levels also. However, speculators have sold CAD futures the last two weeks and the percentile indicator is turning over. It looks like CAD selling is back, giving scope to new lows (USDCAD highs).
AUD: Long positions nearly doubled last week, indicating a strong demand for the Aussie. The strong increase in longs indicates a return to Aussie strength and potential break above the .8000 figure.
