Last week the September yen opened at 1.2930, had a weekly high on Monday at 1.3113, low at 1.2467 (the day the Bank of Japan (BOJ) announced intervention), and closed the week on Friday at 1.2755. You can see from the daily chart below that Friday’s S&P downgrade is causing strength in the yen, something I am sure the BOJ is not happy with. The technicals on the daily chart did show chart damage with the Thursday announcement. ADX fell from above 60 to 52, still a strong trending market, MACD crossed down below the signal line but we do not see major divergence, and Stocahstics corrected from overbought territory.
In the Swiss franc, the government announced drops in interest rates this past Wednesday to lower the franc. This past week the franc opened at 1.2606, had a weekly high on Friday of 1.3206, low on Monday at 1.2582 and closed the week at 1.3048. No major effect showing from the drop in rates. Looking at the daily chart below we see that ADX is at 64 (very strong trend), MACD is bullish and Stochastics are overbought. You can also see where Trends in Futures went long this market, nice trade.
Proceed to Page 2 for the latest COT Data...COT Data
On the weekly chart below you see that in the COT report from this past Friday that Commercials in the yen are now -64,854 contracts net-short, a 52-week low. We will have to see how the BOJ will respond.
In the franc, Commercials are -19,431 contracts net-short. That is off the 52-week low of -42,387 contracts reported on March 18. Also, we see the franc up today. Is another interest rate drop coming? Depends on how bad Swiss officials want to drop the franc.
As expected, the markets are responding accordingly to the S&P downgrade of U.S. debt. Today, Monday, S&P continued its assault on the U.S. economy, and ultimately the world’s, as it downgraded Fannie and Freddie Mac as well as other institutions linked to long-term U.S. debt.
As with all market drops, this too shall pass.
|
Commodity |
12-mo low |
12-mo hi |
5-Aug |
29-Jul |
|
Cattle (feed) |
-1,290 |
7,100 |
2,235 |
2,434 |
|
Cattle (live) |
-73,179 |
10,437 |
149 |
-4,413 |
|
Hogs |
-35,979 |
21,270 |
-17,565 |
-13,774 |
|
Corn |
-413,915 |
-168,342 |
-261,477 |
-241,488 |
|
Oats |
-7,738 |
-2,977 |
-3,762 |
-3,735 |
|
Soybeans |
-203,260 |
-47,513 |
-103,106 |
-120,304 |
|
Soybean meal |
-90,487 |
-12,672 |
-44,525 |
-50,205 |
|
Soybean oil |
-117,444 |
-13,670 |
-32,145 |
-30,257 |
|
Wheat |
-32,577 |
65,226 |
65,226 |
58,878 |
|
Orange juice |
-22,341 |
-6,588 |
-22,341 |
-21,459 |
|
Coffee |
-46,751 |
-6,067 |
-6,067 |
-7,217 |
|
Cocoa |
-41,808 |
8,586 |
-13,012 |
-19,554 |
|
Sugar |
-221,694 |
-104,595 |
-186,625 |
-193,815 |
|
Cotton |
-69,857 |
-26,984 |
-33,604 |
-35,642 |
|
British pound |
-66,435 |
35,737 |
-10,464 |
-5,034 |
|
Canada dollar |
-115,190 |
-13,109 |
-70,299 |
-65,886 |
|
Euro FX |
-124,855 |
50,392 |
-6,099 |
-25,744 |
|
Japanese yen |
-64,864 |
76,983 |
-64,864 |
-54,548 |
|
Swiss franc |
-42,387 |
-13,396 |
-19,431 |
-21,607 |
|
US dollar index |
-20,849 |
14,003 |
-3,096 |
-4,738 |
|
Mexican Peso |
-140,414 |
-14,488 |
-93,802 |
-98,064 |
|
Australian dollar |
-110,025 |
-41,514 |
-95,650 |
-101,746 |
|
S&P 500 |
-88,893 |
23,124 |
-32,118 |
-48,050 |
|
T-note -10 yr |
-74,761 |
229,611 |
89,201 |
58,975 |
|
T-bond -30 yr |
-43,324 |
88,803 |
37,429 |
40,433 |
|
Eurodollar |
-1,179,414 |
81,781 |
-119,996 |
-47,689 |
|
Crude oil |
-319,669 |
-25,439 |
-181,231 |
-191,553 |
|
Heating oil |
-66,097 |
7,568 |
-45,646 |
-48,573 |
|
RBOB Gasoline |
-85,987 |
-10,453 |
-73,551 |
-79,234 |
|
Natural gas |
108,160 |
228,910 |
149,673 |
134,586 |
|
Copper |
-36,201 |
-2,547 |
-26,219 |
-27,302 |
|
Gold |
-302,740 |
-193,197 |
-287,634 |
-282,973 |
|
Platinum |
-34,909 |
-17,979 |
-27,039 |
-25,092 |
|
Silver |
-65,413 |
-29,166 |
-44,588 |
-42,773 |
Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
If you need help understanding how to understand how to use the COT report to your benefit, please email me at Gary@crbtrader.com and put COT report in the subject line. Please include your name and telephone number in the email.
Proceed to Page 3 for this week's detailed fundementals charts...
Fundamentals
The U.S. Dollar Index rebounded to a two-week high on Thursday after the European Central Bank (ECB) extended its liquidity measure through the end of the year and the BOJ intervened in the forex market to weaken the yen.
Bullish factors include:
- Weakness in the euro, which slipped to a two-week low against the dollar as contagion of the European sovereign-debt crisis prompted the ECB to lend European banks as much money as they need for six months and extended its existing emergency liquidity measures through the end of the year.
- Weakness in the yen, which fell to a three-week low against the dollar after the BOJ intervened in the currency market to weaken the yen and expanded its asset-purchase fund to ¥15 trillion ($189 billion) from ¥10 trillion and expanded a credit facility by ¥5 trillion to ¥35 trillion.
- Increased safe-haven demand for the dollar after global equity markets slumped and concern that the European debt crisis may widen after credit-default swaps to insure the government debts of France, Italy and Spain all climbed to records.
Bearish factors include:
- Recent weakness in U.S. economic data, which could force the Fed into QE3.
- The possibility of a near-term U.S. credit rating downgrade.
Fundamental outlook — Bear market correction — The dollar received a temporary boost after the ECB extended its liquidity measures, the BOJ intervened in support of USD/JPY and fears emerged of a European banking crisis. However, the dollar’s longer term trend remains bearish due to:
- The threat of a U.S. credit downgrade
- Repatriation demand for yen in the wake of Japan’s earthquake crisis
- Weak U.S. economic data
- Poor U.S. interest rate differentials
- The intractable U.S. current account deficit
Have a prosperous trading week.
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