The Euro, Pound, and Kiwi have turned from bearish sentiment extremes so expect these currencies to advance against the US dollar.
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The COT Index is the percentile of the difference between net speculative positioning and net commercial positioning measured over the last 52 weeks. A reading close to 0 suggests that a bottom is forming and a reading close to 100 suggests that a top is forming. The readings are for the actual currency, not the currency pair. For example, a reading of 100 on the Canadian Dollar suggests that the Canadian Dollar is close to a top (USDCAD close to a bottom).
Readings of 95 and higher as well as 5 and lower are in boldfaced red type to indicate potential market extremes. The last 4 weeks of the COT Index are shown because it is just as important to know where the index is coming from. For example, an increasing index is bullish until the index is extreme (near 100), at which time the risk of a reversal or pause in the trend increases.
[B]US Dollar Index: [/B]The 52 week COT index is at 94 and the 13 week index is at 92. With the indexes remaining very close to extreme territory for multiple weeks now, USD weakness is likely.
[B]Implications: [/B]Bearish
[B]EUR: [/B]The 52 and 13 week indexes are at 6 and 25. A bearish extreme has been realized and the Euro should continue to gain in the next few weeks.
[B]Implications: [/B]Bullish
[B]GBP[/B]: GBP positioning is similar to Euro positioning. The 52 and 13 week indexes are both at 6 and 25 after being near 0 for multiple weeks. Both indexes have indicated a bearish extreme, indicating that the GBP should continue to gain.
[B]Implications: [/B]Bullish
[B]CHF:[/B] The readings are at 35 and 17 for the 52 and 13 week indexes. The 13 week index had been at 0 for multiple weeks, indicating a bearish sentiment extreme. Expect CHF strength from last week to continue.
[B]Implications: [/B]Bullish
[B]JPY: [/B] The 52 and 13 week COT indexes are at 71 and 17 now. The 13 week index had hit 0 twice in the previous 4 weeks, indicating that a turn towards JPY strength is likely. The Yen began gaining last week, so expect this trend to continue.
[B]Implications: [/B]Bullish
[B]CAD: [/B]The 25 and 50 week COT indexes are at 49 and 83. Neither index indicates potential for a bullish or bearish extreme at this point.
[B]Implications: [/B]Neutral
[B]AUD:[/B] The 52 and 13 week COT indexes are at 82 and 83. Neither index indicates potential for a bullish or bearish extreme so the trend towards AUD strength should continue.
[B]Implications: [/B]Neutral
[B]NZD:[/B] The 52 and 13 week COT indexes are at 4 and 8 after being at 4 and 0 last week. Sentimnet has turned from a bearish extreme, therefore risk is to the upside.
[B]Implications: [/B]Bullish