Latest CFTC Release Dated July 22, 2008:
Discuss Trader Sentiment and Positioning at the DailyFX Forum
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. 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][B] The indexes have turned from near 100 recently, and are pointed down, indicating that the trend is towards lower prices. We’ll not look for a bottom until at least the 13 week index is at 0. [/B]
[B][/B]
[B]Implications: [/B][B]Bearish[/B]
[B]EUR: [/B][B]The 52 week index has turned from 0 (early June) but the 13 week index has accelerated so fast that it was at 100 last week (after being near 0 in June). We wrote last week that “speculators have piled on Euro longs quickly, making it unlikely that the Euro is headed much higher from current levels. At least a setback should take place.” The setback has occurred and more losses are possible. [/B]
[B][/B]
[B]Implications: [/B][B]Neutral[/B]
[B]GBP[/B]: [B]The 52 and 13 week indexes are at 43 and 83. The analysis for the GBP is the same as that for the Euro; the short term index has increased significantly and the 52 week index is still relatively low. Expect a pullback.[/B]
[B]Implications: [/B][B]Neutral[/B]
[B]CHF:[/B] [B]The 52 and 13 week readings are at 35 and 75. The indexes have been extremely volatile lately. A bearish extreme reading from the 13 week index in May turned us CHF bullish (USDCHF bearish) but the indexes indicate that a bullish extreme was registered recently and that weakness remains likely (USDCHF strength).[/B]
[B]Implications: [/B][B]Bearish[/B]
[B]JPY: [/B] [B]The 52 and 13 week COT indexes are at 37 and 33. Both indexes have turned lower after spiking from bearish extreme levels. Expect Yen weakness to continue until the indexes are near 0. [/B]
[B][/B]
[B]Implications: [/B][B]Neutral[/B]
[B]CAD: [/B][B]The 52 and 13 week COT indexes are at 43 and 50 after being near 0 for weeks. Sentiment has turned from a sentiment extreme, indicating potential turn towards CAD strength. However, the CAD has not reversed even as the indexes have reversed. This scenario is often followed by additional weakness.[/B][B][/B]
[B]Implications: [/B][B]Bearish[/B]
[B]AUD:[/B] [B]The 52 and 13 week COT indexes are at 82 and 50, having rolled over from near 100. With a bullish extreme potentially in place, weakness is expected.[/B]
[B][/B]
[B]Implications: [/B][B]Bearish[/B]
[B]NZD:[/B] [B]The 52 and 13 week COT indexes flattened out after jumping two weeks ago. Last week, we wrote that “with speculators adding to longs so aggressively, expect weakness.” There is no change to the outlook. [/B]
[B][/B]
[B][/B]
[B]Implications: [/B][B]Bearish[/B]
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