Commitments of Traders Report – Week 14 2016

Commitments of Traders Report – Week 14 2016 

The Commitments of Traders (COT) report provides a breakdown of each Tuesday’s open interest for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC.
This is an essential tool for gauging long term sentiment in futures markets.
 
For most recent reports go to Commitments of Traders

The Commitments of Traders Report is issued by CFTC.
It reports all open positions in futures markets of three main groups of traders:
Commercial Traders - Hedgers
Non-Commercial Traders – Money Managers
Non-Reportable – Retail market
The report breaks down each Tuesday’s Open Interest and gives us a powerful view on what exactly the big guys have been doing in the marketplace and what their plans might be.

It is issued every Friday and includes data from Tuesday to Tuesday. The three days prior to the release date are not included.
In this report we cover EURO, GBP, AUD, JPY and we focus on Non-Commercial traders as an indication of profit driven bias.

How to use it.

COT report is not designed as a market entry tool. The market can be short term bullish in a long term downtrend.
COT report is designed to gauge supply and demand of important market participants.
It can be used to confirm mid/long term fundamental bias in a given market.
For example:
Decrease/flat non-commercial long positions on rising prices might suggest the top is imminent. Traders should seek a short setup near the resistance.
Increase in short non-commercial positions on falling prices might support the downtrend.

Highlights

There were some movements in the currency market this week. In terms of economic data, we had GDT price index released last Tuesday. The index printed a positive 2.1%. This is after being negative 2.9% the last time. Kiwi didn’t really react to it. It seems like NZDUSD is not that much responsive to GDT as it used to be.
FOMC minutes were released on Wednesday. Major currencies didn’t react to minutes but FED WATCH noted further deterioration in interest rates hikes this year. There is a rumour that FED meeting up next Monday to discuss emergency monetary measures. Let’s see.
Biggest loser was most definitely USDJPY. The pair kept printing lower throughout the week. Good news on Canadian employment. On Friday, CAD Employment Change printed 40.6K vs 10.4K expected. Unemployment rate dropped to 7.1% (7.3% prior)
USDCAD had another leg down and it is trading near the recent low below 1.30.
Looking at Commitments of Traders this week, there is some changes. Larger increase in EURO FX longs, more bearishness on GBP futures.