Last week the March US Dollar Index opened at 81.670 and closed the week at 81.791, staying nicely tucked in its current range of 82.00-80.00. In technicals you can see on the below daily chart that the dollar is in a weak trend with ADX at 23. MACD shows very little price momentum and Stocastics are dropping just below overbought territory.
Proceed to Page 2 for the latest COT Data...
COT Data
Looking at the five-year weekly chart below you can see where the US dollar hit its low back in 2008. If you recall that is when many commodities hit highs. Remember crude at $147? Now look at how big money is posturing in the US Dollar at the beginning of 2012 — looks more similar to the beginning of 2010. The one main ingredient for the US dollar is the euro, which is expected to have a rough 2012. If you have been reading “Market Pulse” for a while, you know how I feel about expectations and predictions. They are like opinions, and you know what they say about opinions. You see where weekly momentum comes in. And that is something you can see only on a chart. Watch for Commercials liquidation similar to 2010 and watch the market. Or better yet, what happens if Commercials continue adding to net shorts?
I get a kick out of how the US Dollar Index over 80 is considered strong. Look at the monthly chart below and so will you. Look where the index was trading just 12 years ago.
You now have an idea of what to watch for regarding the US dollar in 2012. I have no doubt there are going to be many trending opportunities in 2012. Big money definitely will see to that. Have a prosperous week.
|
Commodity |
12-mo low |
12-mo hi |
13-Jan |
6-Jan |
|
Cattle (feed) |
-1,290 |
5,543 |
482 |
894 |
|
Cattle (live) |
-40,877 |
10,437 |
-13,384 |
-17,545 |
|
Hogs |
-46,574 |
21,270 |
-7,541 |
-11,144 |
|
Corn |
-413,915 |
-36,487 |
-113,770 |
-81,679 |
|
Oats |
-7,738 |
83 |
-58 |
-359 |
|
Soybeans |
-203,260 |
28,178 |
-20,068 |
-11,900 |
|
Soybean meal |
-84,656 |
32,081 |
7,650 |
16,543 |
|
Soybean oil |
-117,444 |
29,745 |
-5,764 |
1,856 |
|
Wheat |
-32,577 |
82,335 |
75,002 |
65,502 |
|
Orange juice |
-22,341 |
-9,769 |
-16,279 |
-14,529 |
|
Coffee |
-45,699 |
1,153 |
-3,540 |
-2,412 |
|
Cocoa |
-41,808 |
10,252 |
8,714 |
8,488 |
|
Sugar |
-221,694 |
-25,626 |
-31,975 |
-41,174 |
|
Cotton |
-46,785 |
-2,152 |
-19,085 |
-16,267 |
|
British pound |
-66,435 |
88,682 |
55,613 |
47,751 |
|
Canada dollar |
-115,190 |
25,942 |
19,007 |
18,500 |
|
Euro FX |
-124,855 |
181,662 |
181,662 |
166,069 |
|
Japanese yen |
-64,864 |
76,983 |
-56,728 |
-51,657 |
|
Swiss franc |
-42,387 |
26,491 |
26,491 |
22,720 |
|
US dollar index |
-53,158 |
14,003 |
-52,962 |
-49,326 |
|
Mexican Peso |
-140,414 |
39,901 |
24,549 |
28,686 |
|
Australian dollar |
-110,025 |
479 |
-60,123 |
-49,161 |
|
S&P 500 |
-77,473 |
73,398 |
-11,225 |
-16,359 |
|
T-note -10 yr |
-20,966 |
229,611 |
15,661 |
10,459 |
|
T-bond -30 yr |
-20,389 |
88,803 |
19,453 |
16,444 |
|
Eurodollar |
-408,407 |
1,126,194 |
590,076 |
826,425 |
|
Crude oil |
-319,669 |
-114,385 |
-195,395 |
-172,152 |
|
Heating oil |
-63,197 |
-4,204 |
-39,501 |
-31,858 |
|
RBOB Gasoline |
-84,937 |
-38,417 |
-79,799 |
-71,286 |
|
Natural gas |
108,160 |
228,910 |
133,704 |
137,370 |
|
Copper |
-35,687 |
14,419 |
6,835 |
7,834 |
|
Gold |
-287,634 |
-159,153 |
-166,574 |
-161,843 |
|
Platinum |
-35,249 |
-18,670 |
-22,486 |
-21,919 |
|
Silver |
-57,793 |
-14,132 |
-19,062 |
-15,916 |
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 US Dollar Index posted a fresh 1-1/4 year high and remains well supported because of the European sovereign debt crisis. The EUR/USD slumped to a 1-1/3 year low and USD/JPY continues to move sideways, moderately above its all-time high of 75.35 per dollar. Bullish factors include:
- Comments from the head of sovereign ratings at Fitch Ratings who said the European Central Bank (ECB) should boost bond purchases to support Italy and prevent a "cataclysmic" collapse of the euro along with the statement from the Fitch that Italy faces a “significant chance” of a downgrade later this month.
- The larger-than-expected declines in November German and Spanish industrial production, which signals a slowdown in the Eurozone economy.
- Comments from ECB council member Nowotny who said he sees the risk of a “velvet recession” with GDP growth in the Eurozone at zero this year.
- The action by Portugal to reduce its 2012 Portuguese GDP estimate to –3.1% contraction annualized, weaker than an October estimate of –2.2% annualized, which may make it harder to refinance its debt and worsen the European debt crisis.
Bearish factors include:
- Optimistic comments from ECB President Draghi who said he sees “tentative signs of stabilization of economic activity at low levels.”
- Short covering in the euro after CFTC data showed that futures traders increased their short positions against the euro to a record 138,909 contracts in the week ended Jan 3.
Fundamental outlook — Medium-term bullish — The dollar’s trend remains bullish on the European debt crisis and improved U.S. economic growth. Bouts of short covering may boost the euro temporarily, but pressure remains from deteriorating interest rate differentials with the 50 bp ECB rate cut since early November and prospects of a recession in the Eurozone economy.
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