Archive for Opinions – Page 4

11 Feb

Has globalization lessened the importance of physical distance? For economic shocks, new research suggests ‘yes’

By Josh Ederington, Miami University and Jenny Minier, Miami University 

National economies are increasingly moving in sync and responding to the same booms and busts as a result of near-instantaneous communications and interdependent global supply chains. This is a sharp change from much of the 21st century, when economies were primarily affected by economic shocks in neighboring countries.

That’s what we found in a paper published in the journal Economic Letters, in which we calculated measures of economic correlation using data on gross domestic product for 70 countries over the past 60 years. Along with fellow economic scholars Yoonseon Han and David Lindequist, we found that physical distance was indeed less important than it used to be, particularly with regard to how interconnected countries are to one another.

Specifically, we measured the extent to which countries have found their business cycles — the traditional boom-bust intervals of economic performance — in sync. For example, when there is a positive shock to production in Germany, to what extent does this affect incomes in the United States?

We were interested in whether the relationship between distance and economic correlation has changed over time.

What we found was that from 1960-1999, business cycles were strongly localized. That is, a country’s economy was much more likely to be impacted by shocks to nearby countries than by shocks in faraway countries. For example, the U.S. was more affected by economic conditions in Canada or Mexico than it was to economic conditions in the United Kingdom or South Korea.

This finding is not surprising and fits well with a long economic literature showing that countries are more likely to trade with nearby countries and that the volume of trade between two countries is a significant predictor of how synchronized their business cycles are.

However, we went on to find that this relationship between physical distance and economic correlation started to break down after 2000. Specifically, for the past 20 years, there has been no statistically significant relationship between the geographic distance between two countries and the extent to which incomes in the two countries move together — what economists refer to as their economic covariance.

Why it matters

In the late 1990s and early 2000s, a number of economists, including Frances Cairncross and Thomas Friedman, popularized the idea that new technologies like the internet and containerization had led to the death of distance, in which our new lives would be increasingly globalized. They imagined a future in which these new technologies not only impacted how goods were produced — like global supply chains — but also how we work and live.

Such theories were met with some skepticism by trade researchers at the time, and not all of the predictions have come true. For example, the link between distance and trade flows has proved stubbornly persistent. Even today, the top-two trading partners of the U.S. remain Canada and Mexico. And one only has to look at housing prices in major urban centers in the U.S. to see that physical location remains highly valued to most people.

However, our research suggests that at least some of the popular predictions about the globalized economy might be coming true. For instance, the world economy appears to have made countries increasingly susceptible to global, as opposed to localized, shocks.

This was made devastatingly clear to millions of people during the pandemic, when supply chain bottlenecks reverberated across the globe, subsequently generating a worldwide rise in prices. As a result, U.S. economic and trade policy discussions have been increasingly focused on potential vulnerabilities to foreign shocks. Indeed, a new buzzword during the Biden administration was “supply chain resiliance.”

What still isn’t known

Our work provides evidence that business cycles and economic shocks have become more globalized over the past couple of decades. Many of the main economic events from 1960-2000 – like the 1980s savings and loan crisis or the 1997 Asian currency crisis – had primarily localized effects. But more recently, the principal economic events of the past two decades — like the 2008 financial crisis — have had far more global implications.

What we don’t know is whether this pattern will continue, resulting in a new era in which most of the world’s economies move in tandem. Or will a new turn toward economic nationalism lead to a reversal in which economies – and economic shocks – become more localized once again?

The Research Brief is a short take on interesting academic work.The Conversation

About the Author:

Josh Ederington, Professor of Economics, Miami University and Jenny Minier, Julian Lange Professor of Economics, Miami University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Economics & Fundamentals Opinions
10 Feb

Why Trump’s new pick for Fed chair hit gold and silver markets – for good reasons

By Henry Maher, University of Sydney 

After months of speculation, US President Donald Trump confirmed he will be nominating Kevin Warsh as the next chair of the US Federal Reserve. The appointment has been closely watched in the context of Trump’s ongoing conflict with the Fed and its current chairman Jerome Powell.

The immediate reaction to the announcement was a significant crash in gold and silver markets. After months of record highs and stretched valuations, spot prices for gold and silver dropped 9% and 28% respectively after the announcement. The US stock market also fell, with major indexes all reporting modest losses.

However, in the context of concerns over Trump’s interference with the Fed, the market crash can ironically be understood as an early vote of confidence in Warsh’s independence and suitability for the role.

Understanding why requires the context of Trump’s ongoing conflict with the Federal Reserve, and the importance of central bank independence to our current global financial system.

Trump’s war with the Fed

The last year has seen Trump in an unprecedented conflict with the Federal Reserve.

Trump appointed current Chairman Jerome Powell back in 2017. However, the relationship quickly soured when Powell did not cut interest rates as quickly as Trump wanted. In characteristically colourful language, Trump has since called Powell a “clown” with “some real mental problems”, adding “I’d love to fire his ass”.

The war of words descended into legal threats. Trump’s Justice Department announced an investigation into Federal Reserve Governor Lisa Cook over alleged fraud in historical mortgage documents. Then last month, in a shocking escalation the Justice Department opened a criminal investigation into Powell relating to overspending in renovations of the Federal Reserve offices.

Both sets of allegations are widely viewed as baseless. However, Trump has tried to use the investigation as grounds to fire Cook. The case is currently before the Supreme Court.

Powell has hit back strongly at Trump, saying the legal threats were

a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.

Powell received support from 14 international central bank chiefs, who noted “the independence of central banks is a cornerstone of price, financial and economic stability”.

Historically, presidential interference with the Fed was a major cause of the stagflation crisis in the 1970s. More recently, both Argentina and Turkey have experienced significant financial crises caused by interference with central bank independence.

Who is Kevin Warsh?

Kevin Warsh is a former banker and Federal Reserve governor, who previously served as economic advisor to both President George W Bush and President Trump.

Originally Trump seemed likely to favour the current director of Trump’s National Economic Council, Kevin Hassett, for the job. However, Hassett was widely viewed as being too influenced by Trump, intensifying fears about Fed independence.

Warsh appears more independent and brings a reputation as an inflation “hawk”.

What is an inflation hawk?

The Federal Reserve is responsible for setting US interest rates. Put simply, lower interest rates can increase economic growth and employment, but risk creating inflation. Higher interest rates can control inflation, but at the cost of higher unemployment and lower growth.

Getting the balance right is the central role of the Federal Reserve. Central bank independence is essential to ensure this delicate task is guided by the best evidence and long-term needs of the economy, rather than the short-term political goals.

An inflation “hawk” refers to a central banker who prioritises fighting inflation, compared to a “dove” who prioritises growth and jobs.

From Warsh’s previous time at the Federal Reserve, he established a strong reputation as an inflation hawk. Even in the aftermath of the global financial crisis of 2008, Warsh was more worried about inflation than jobs.

Given Trump’s past conflict with Powell around cutting interest rates, Warsh might seem a curious choice of candidate.

More recently though, Warsh has moderated his views, echoing Trump’s criticism of the Fed and demands for lower interest rates. Whether this support will continue, or if his hawkish tendencies return leading to future conflict with Trump, remains to be seen.

The market reaction

The crash in gold and silver, and decline in stock markets, suggests investors view interest rate cuts as less likely under Warsh than alternative candidates.

Gold and silver prices typically rise in response to instability or fears of inflation.

The previous record highs were driven by many factors, including global instability, concerns over Fed independence, and a speculative bubble.

That Warsh’s appointment has triggered a market correction in precious metals means investors expect lower inflation, and greater financial stability. The US dollar trading higher also supports this view.

The credibility of the Fed is at stake

The past month has seen much discussion of the changing world order. Canadian Prime Minister Mark Carney recently decried the end of the international rules-based order and called for a break from “American hegemony”.

The global dominance of the US dollar is a crucial plank of US economic hegemony. Though Trump clearly remains sceptical of central bank independence, his appointment of Warsh suggests he recognises the importance of retaining the credibility of the US currency and Federal Reserve.

Whether that recognition can continue to temper Trump’s instinct to interfere with the setting of interest rates remains to be seen.The Conversation

About the Author:

Henry Maher, Lecturer in Politics, Department of Government and International Relations, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Metals Opinions
10 Feb

Why corporate America is mostly staying quiet as federal immigration agents show up at its doors

By Alessandro Piazza, Rice University 

When U.S. Border Patrol agents entered a Target store in Richfield, Minnesota, in early January, detaining two employees, it marked a new chapter in the relationship between corporate America and the federal government.

Across the Twin Cities, federal immigration enforcement operations have turned businesses into sites of confrontation — with agents in store parking lots rounding up day laborers, armed raids on restaurants and work authorization inspections conducted in tactical gear.

Some retailers report revenue drops of 50% to 80% as customers stay home out of fear. Along Lake Street and in East St. Paul, areas within the Twin Cities, an estimated 80% of businesses have closed their doors at some point since the operations began.

Then came the killing of U.S. citizens Renee Good and Alex Pretti, the latter of which came a day after widespread protests and a one-day business blackout involving over 700 establishments.

The response of corporate America to those killings was instructive — both for what was said and left unsaid. After the Pretti killing, more than 60 CEOs from Minnesota’s largest companies — Target, 3M, UnitedHealth Group, U.S. Bancorp, General Mills, Best Buy and others — signed a public letter organized by the Minnesota Chamber of Commerce. The letter called for “peace,” “focused cooperation” among local, state and federal officials, and a “swift and durable solution” so that families, workers and businesses could return to normal.

What it didn’t do was name Pretti, mention federal immigration enforcement or criticize any specific policy or official. It read less like moral leadership and more like corporate risk management.

As a researcher who studies corporate political engagement, I think the Minnesota CEO letter is a window into a broader shift. For years, companies could take progressive stances with limited risk — activists would punish them if they remained silent on an issue, but conservatives rarely retaliated when they spoke up. That asymmetry has collapsed. Minneapolis shows what corporate activism looks like when the risks cut both ways: hedged language, no names named and calls for calm.

A shifting pattern

In 2022, after the Supreme Court overturned Roe v. Wade, corporate America was remarkably quiet compared with its vocal stances on LGBTQ+ rights or the war in Ukraine.

The explanation: Companies tend to hedge on issues that are contested and polarizing. In my research with colleagues on companies taking stances on LGBTQ+ rights in the United States, I’ve found that businesses frame their stances narrowly when issues are unsettled — focusing on workplace concerns and internal constituencies like employees rather than broader advocacy. Only after issues are legally or socially settled do some companies shift to clearer activism, adopting the language of social movements: injustice, moral obligation, calls to action.

By that logic, the Minnesota CEOs’ caution makes sense. The Trump administration’s federal immigration enforcement policy is deeply contested. There’s no clear legal or social settlement in sight.

But something else has changed since 2022 — something that goes beyond any particular issue.

For years, corporate activism operated under a favorable asymmetry that allowed them to stake out public positions on controversial topics without much negative consequence.

That is, activists and employees pressured companies to speak out on progressive causes, and silence carried real costs. Meanwhile, conservatives largely subscribed to free-market economist Milton Friedman’s view that the only social responsibility of business is to increase its profits. They generally didn’t demand corporate stances on their issues, and they didn’t organize sustained punishment for progressive corporate speech.

That asymmetry has collapsed

During the Black Lives Matter protests of 2020, corporations rushed to declare their commitments to racial justice, diversity and social responsibility. Many of those same companies have since quietly dismantled diversity, equity and inclusion programs, walked back public commitments and gone silent on issues they once called moral imperatives. It appears that their allegedly deeply held values were contingent on a favorable political environment. When the risks shifted, the values evaporated.

The turning point may have been Disney’s opposition to Florida’s “Don’t Say Gay” law in 2022. The company faced criticism from employees and activists for not doing enough – and then fierce retaliation from Florida’s government, which stripped Disney of self-governing privileges it had held for 55 years.

In other high-profile examples, Delta lost tax breaks in Georgia after ending discounts for National Rifle Association members following the Parkland shooting. And Bud Light lost billions in market value after a single social media promotion that featured Dylan Mulvaney, a transgender influencer.

Conservatives learned to play the game that progressive activists invented. And unlike consumer boycotts, government retaliation carries a different kind of weight.

Minneapolis reveals the new calculus

What makes Minneapolis distinctive is that the federal government isn’t a distant policy actor debating legislation in Washington. It’s a physical presence in companies’ daily operations. When federal agents can show up at your store, detain your employees, raid your parking lot and audit your hiring records, the calculation about whether to criticize federal policy looks very different than when the worst-case scenario is an angry tweet from a politician.

Research finds that politicians are less willing to engage with CEOs who take controversial stances – even in private meetings – regardless of local economic conditions or the politicians’ own views on business. The chilling effect is real. As one observer noted, Minnesota companies communicated through industry associations specifically “to avoid direct exposure to possible retaliation.”

“De-escalation,” then, has become the corporate buzzword of choice because, as one news report in The Wall Street Journal noted, it “sounds humane while remaining politically noncommittal.” It points to a process goal – reduce conflict, restore order – rather than a contested diagnosis of responsibility.

This is the triple bind facing businesses in Minneapolis: pressure from the federal government on one side, pressure from activists and employees on the other, and the economic devastation from enforcement itself — comparable in some areas to the COVID-19 pandemic — crushing them in the middle. It’s a situation that rewards silence and punishes principle, and most companies are making the predictable choice.

And yet the situation within companies is also full of internal tensions, whether they’re companies headquartered in Minnesota or not. At tech company Palantir, which holds contracts with U.S. Immigration and Customs Enforcement, employees took to internal Slack channels after Pretti’s death to express that they felt “not proud” to work for a company tied to what they described as “the bad guys.” Similar sentiments could be seen at elsewhere, where rank-and-file employees expressed far more vocal outrage than their bosses.

What comes next

The Minnesota CEO letter is what corporate political engagement looks like when the risks run in every direction: no injustice framing, no attribution of blame, no names named — just calls for stability and cooperation.

As a local Minneapolis writer put it in an op-ed: “Stand up, or sit down … because the Minnesotans who are standing up? We don’t recognize you.”

It’s not cowardice, exactly. It’s what the research predicts when an issue is contested and the costs of speaking cut both ways.

But it does mean Americans shouldn’t expect corporations to lead when government power is directly at stake. The conditions that enabled corporate activism on LGBTQ+ rights — an asymmetry where speaking out was relatively low-risk — don’t exist here.

Until the political landscape shifts, the hedged statement and the cautious coalition letter are the new normal. Corporate activism, it turns out, might always have been more about positioning than principle.The Conversation

About the Author:

Alessandro Piazza, Assistant Professor of Strategic Management, Rice University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Economics & Fundamentals Opinions
08 Feb

Currency Speculators boost Euro bets to highest since 2023, CAD bets go Bullish

By InvestMacro

Speculators OI FX Futures COT Chart

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday February 3rd and shows a quick view of how large market participants (for-profit speculators and commercial traders) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the euro will decline versus the dollar.

Weekly Speculator Changes led by Euro, Australian Dollar and Canadian Dollar

Speculators Nets FX Futures COT Chart
The COT currency market speculator bets were higher this week as ten out of the eleven currency markets we cover had higher positioning while the other one markets had lower speculator contracts.

Leading the gains for the currency markets was the EuroFX (31,227 contracts) with the Australian Dollar (18,972 contracts), the Canadian Dollar (18,176 contracts), the Japanese Yen (14,711 contracts), the New Zealand Dollar (13,451 contracts), the Brazilian Real (12,117 contracts), the US Dollar Index (3,553 contracts), the British Pound (2,251 contracts), the Swiss Franc (2,176 contracts) and Bitcoin (318 contracts) with also showing positive weeks.

The currency seeing declines in speculator bets on the week was the Mexican Peso with a drop by -12,522 contracts on the week.

Currency Speculators sharply boost Euro bets to highest since 2023, CAD bets go Bullish

Highlighting this week’s currency speculator changes were the strong gains in the Euro, the Australian Dollar, and the Canadian Dollar.

First off, the Euro jumped by over 30,000 contracts this week and this week’s gain marked the largest one-week gain since March of 2025, when speculative bets surged by over +46,000 contracts. This week’s surge follows last week’s rise by over 20,000 contracts and has now pushed the overall speculative level to a total of 163,361 net contracts, which marks the highest level for the Euro bets dating back to August 1st of 2023. The European currency’s speculative standing has now been above +100,000 net contracts for 10 consecutive weeks, and for 30 out of the last 34 weeks as well. The Euro exchange rate this week dipped slightly for a second consecutive week and closed out the week around the 1.1840 exchange level. Last week, however, the Euro hit its highest level since 2021 with a high around 1.2110 before retreating. We’ll see in the weeks to come if the Euro will threaten the 1.20 psychological threshold once again.

Next up, the Australian Dollar speculative bets surged higher for a second consecutive week, and are now in an overall bullish position also for a second straight week. Last week marked the first time since December of 2024 that the Australian Dollar speculative position was in bullish territory. And this week, the position grew further. The Australian Dollar exchange rate has risen for three consecutive weeks, and this week closed at the highest levels since 2023, where it closed above the 0.700 significant psychological level. The Australian Dollar is up by over 5% against the U.S. Dollar this year so far, and is higher by about 14% since the start of 2025. The weekly RSI for the Australian Dollar is currently in overbought position so we’ll see if the Aussie can hold these multi-year high levels.

The Canadian Dollar speculator positions rose for a third consecutive week, as well as the eighth time in the last ten weeks that speculator bets have been bullish. Overall, the net standing for the Canadian Dollar speculators this week went bullish with a total of 2,130 net contracts. This is the first time the Canadian Dollar has seen a bullish net contract level since August 1st of 2023, a span of 131 straight weeks. The turnaround in the Canadian Dollar speculator positions has been fast and furious as the net position totaled a -130,600 contracts as recently as December 9th. And then eight weeks later, the net position has managed to turn bullish. In the foreign exchange markets, the Canadian Dollar trades right around its 200-week moving average at the 0.7333 exchange rate. This week, the CAD fell a little bit, but has been higher in total over the past three weeks. Time will tell if the CAD can break through its 200-weekly moving average level and can work its way back to the strong support and resistance level of 0.7500.

The US Dollar Index saw improving bets for the second consecutive week and for the ninth time out of the last 10 weeks. This has taken the speculator level from a total of -16,347 net contracts down to a tiny bearish level of just -852 net contracts this week. Overall, the Dollar Index has consistently been in a bearish level dating back to June 10th of 2025, a span of 34 consecutive weeks. In the foreign exchange market, the US Dollar Index saw a boost this week after falling for the previous two weeks and trades at the 97.50 level. Since the beginning of 2025, the Dollar Index has fallen by over 10%, however, prices have bounced off the 96.00 area three times since June. We’ll see if the Dollar Index can hold this level and can find its way higher or will eventually break lower.

Finally, the Swiss Franc positions rose modestly for a third consecutive week and for the fourth time out of the past five weeks. Interestingly, the Swiss Franc speculator net position is highly bearish and has been in an overall bearish level dating all the way back to September of 2021 while the Swiss Franc exchange rate is at the strongest levels it has traded since 2011. The dichotomy in the speculator positions versus the strength of the currency can be explained through hedging, as there has been reports that many business entities are hedging away the historic strength of the Swiss Franc at the current time while the Franc is also a sought-after safe haven in an uncertain geopolitical time. Currently, the Swiss Franc trades at 1.2946 against the U.S. Dollar in the exchange markets. Since the beginning of 2025, the Franc is up by approximately 18% against the U.S. Dollar and looks to be threatening the 1.30 major level.

Mexican Peso leads Currency Price Returns this week

The major currency markets price performance was led by the Mexican Peso this week. The Peso was the highest riser by 1.25% over the past five days. The Brazilian Real followed that up with a 0.99% gain. The Australian Dollar was higher by 0.79%. The US Dollar Index showed a 0.60% rise. The New Zealand Dollar was virtually unchanged at a 0.04% dip, followed by the euro which fell by 0.26%. The Canadian Dollar was lower by 0.28%. The Swiss Franc fell by 0.30%. The British Pound was lower by 0.48%. The Japanese Yen was lower by over 1% with a 1.48% decrease.

Bitcoin was the biggest loser on the week with a 16.45% drop.

Currencies Data:

Speculators FX Futures COT Data Table
Legend: Open Interest | Speculators Current Net Position | Weekly Specs Change | Specs Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by Canadian Dollar & Australian Dollar

Speculators Strength Scores FX Futures COT Chart
COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the Canadian Dollar (98 percent) and the Australian Dollar (95 percent) lead the currency markets this week. The EuroFX (91 percent), Bitcoin (74 percent) and the Mexican Peso (73 percent) come in as the next highest in the weekly strength scores.

On the downside, the Swiss Franc (18 percent) comes in at the lowest strength levels currently and are in Extreme-Bearish territory (below 20 percent). The next lowest strength scores are the the New Zealand Dollar (26 percent), the British Pound (34 percent) and the US Dollar Index (42 percent).

3-Year Strength Statistics:
US Dollar Index (41.8 percent) vs US Dollar Index previous week (32.2 percent)
EuroFX (91.0 percent) vs EuroFX previous week (79.1 percent)
British Pound Sterling (33.7 percent) vs British Pound Sterling previous week (32.7 percent)
Japanese Yen (45.4 percent) vs Japanese Yen previous week (41.4 percent)
Swiss Franc (18.4 percent) vs Swiss Franc previous week (14.0 percent)
Canadian Dollar (97.9 percent) vs Canadian Dollar previous week (88.9 percent)
Australian Dollar (94.8 percent) vs Australian Dollar previous week (81.4 percent)
New Zealand Dollar (25.7 percent) vs New Zealand Dollar previous week (10.3 percent)
Mexican Peso (72.6 percent) vs Mexican Peso previous week (79.6 percent)
Brazilian Real (62.5 percent) vs Brazilian Real previous week (53.6 percent)
Bitcoin (74.1 percent) vs Bitcoin previous week (67.3 percent)

Australian Dollar & Bitcoin top the 6-Week Strength Trends

Speculators Trends FX Futures COT Chart
COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the Australian Dollar (34 percent) and the Bitcoin (32 percent) lead the past six weeks trends for the currencies. The Canadian Dollar (29 percent), the British Pound (12 percent) and the New Zealand Dollar (11 percent) are the next highest positive movers in the 3-Year trends data.

The Brazilian Real (-12 percent) leads the downside trend scores currently with the Mexican Peso (-6 percent), Japanese Yen (-6 percent) and the EuroFX (1 percent) following next with lower trend scores.

3-Year Strength Trends:
US Dollar Index (8.6 percent) vs US Dollar Index previous week (0.5 percent)
EuroFX (1.3 percent) vs EuroFX previous week (-4.9 percent)
British Pound Sterling (11.6 percent) vs British Pound Sterling previous week (13.7 percent)
Japanese Yen (-5.6 percent) vs Japanese Yen previous week (-8.5 percent)
Swiss Franc (6.6 percent) vs Swiss Franc previous week (-8.1 percent)
Canadian Dollar (28.6 percent) vs Canadian Dollar previous week (34.8 percent)
Australian Dollar (33.9 percent) vs Australian Dollar previous week (20.6 percent)
New Zealand Dollar (11.1 percent) vs New Zealand Dollar previous week (0.3 percent)
Mexican Peso (-5.9 percent) vs Mexican Peso previous week (8.9 percent)
Brazilian Real (-12.2 percent) vs Brazilian Real previous week (-21.2 percent)
Bitcoin (31.5 percent) vs Bitcoin previous week (12.4 percent)

Individual COT Forex Markets:

US Dollar Index Futures:

US Dollar Index Forex Futures COT ChartThe US Dollar Index large speculator standing this week recorded a net position of -852 contracts in the data reported through Tuesday. This was a weekly gain of 3,553 contracts from the previous week which had a total of -4,405 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 41.8 percent. The commercials are Bullish with a score of 60.7 percent and the small traders (not shown in chart) are Bearish with a score of 23.3 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend.

US DOLLAR INDEX StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:58.925.77.8
– Percent of Open Interest Shorts:61.920.310.2
– Net Position:-8521,529-677
– Gross Longs:16,6107,2392,188
– Gross Shorts:17,4625,7102,865
– Long to Short Ratio:1.0 to 11.3 to 10.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):41.860.723.3
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:8.6-8.81.2

 

Euro Currency Futures:

Euro Currency Futures COT ChartThe Euro Currency large speculator standing this week recorded a net position of 163,361 contracts in the data reported through Tuesday. This was a weekly lift of 31,227 contracts from the previous week which had a total of 132,134 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 91.0 percent. The commercials are Bearish-Extreme with a score of 6.7 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 91.0 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

EURO Currency StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:33.253.110.2
– Percent of Open Interest Shorts:15.377.24.2
– Net Position:163,361-218,54155,180
– Gross Longs:302,301483,91193,181
– Gross Shorts:138,940702,45238,001
– Long to Short Ratio:2.2 to 10.7 to 12.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):91.06.791.0
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:1.3-3.111.8

 

British Pound Sterling Futures:

British Pound Sterling Futures COT ChartThe British Pound Sterling large speculator standing this week recorded a net position of -13,911 contracts in the data reported through Tuesday. This was a weekly boost of 2,251 contracts from the previous week which had a total of -16,162 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 33.7 percent. The commercials are Bullish with a score of 63.0 percent and the small traders (not shown in chart) are Bullish with a score of 71.0 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

BRITISH POUND StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:41.642.115.0
– Percent of Open Interest Shorts:47.739.012.0
– Net Position:-13,9117,0646,847
– Gross Longs:94,89396,00434,151
– Gross Shorts:108,80488,94027,304
– Long to Short Ratio:0.9 to 11.1 to 11.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):33.763.071.0
– Strength Index Reading (3 Year Range):BearishBullishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:11.6-14.324.2

 

Japanese Yen Futures:

Japanese Yen Forex Futures COT ChartThe Japanese Yen large speculator standing this week recorded a net position of -19,222 contracts in the data reported through Tuesday. This was a weekly rise of 14,711 contracts from the previous week which had a total of -33,933 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 45.4 percent. The commercials are Bullish with a score of 54.6 percent and the small traders (not shown in chart) are Bearish with a score of 49.3 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

JAPANESE YEN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:37.740.412.9
– Percent of Open Interest Shorts:44.035.611.3
– Net Position:-19,22214,4174,805
– Gross Longs:114,428122,66539,140
– Gross Shorts:133,650108,24834,335
– Long to Short Ratio:0.9 to 11.1 to 11.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):45.454.649.3
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-5.65.10.3

 

Swiss Franc Futures:

Swiss Franc Forex Futures COT ChartThe Swiss Franc large speculator standing this week recorded a net position of -40,717 contracts in the data reported through Tuesday. This was a weekly advance of 2,176 contracts from the previous week which had a total of -42,893 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 18.4 percent. The commercials are Bullish with a score of 63.1 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 86.0 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

SWISS FRANC StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:10.469.919.1
– Percent of Open Interest Shorts:53.928.217.3
– Net Position:-40,71739,0121,705
– Gross Longs:9,68765,42417,858
– Gross Shorts:50,40426,41216,153
– Long to Short Ratio:0.2 to 12.5 to 11.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):18.463.186.0
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullishBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:6.6-7.14.5

 

Canadian Dollar Futures:

Canadian Dollar Forex Futures COT ChartThe Canadian Dollar large speculator standing this week recorded a net position of 2,130 contracts in the data reported through Tuesday. This was a weekly gain of 18,176 contracts from the previous week which had a total of -16,046 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 97.9 percent. The commercials are Bearish-Extreme with a score of 6.8 percent and the small traders (not shown in chart) are Bullish with a score of 61.5 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

CANADIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:35.848.114.4
– Percent of Open Interest Shorts:34.851.811.8
– Net Position:2,130-7,9165,786
– Gross Longs:77,397104,11931,230
– Gross Shorts:75,267112,03525,444
– Long to Short Ratio:1.0 to 10.9 to 11.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):97.96.861.5
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:28.6-28.720.1

 

Australian Dollar Futures:

Australian Dollar Forex Futures COT ChartThe Australian Dollar large speculator standing this week recorded a net position of 26,118 contracts in the data reported through Tuesday. This was a weekly boost of 18,972 contracts from the previous week which had a total of 7,146 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 94.8 percent. The commercials are Bearish-Extreme with a score of 1.3 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 91.3 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

AUSTRALIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:46.736.416.3
– Percent of Open Interest Shorts:36.455.37.7
– Net Position:26,118-48,06021,942
– Gross Longs:118,75192,58241,430
– Gross Shorts:92,633140,64219,488
– Long to Short Ratio:1.3 to 10.7 to 12.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):94.81.391.3
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:33.9-30.99.3

 

New Zealand Dollar Futures:

New Zealand Dollar Forex Futures COT ChartThe New Zealand Dollar large speculator standing this week recorded a net position of -34,294 contracts in the data reported through Tuesday. This was a weekly gain of 13,451 contracts from the previous week which had a total of -47,745 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 25.7 percent. The commercials are Bullish with a score of 72.8 percent and the small traders (not shown in chart) are Bullish with a score of 51.3 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

NEW ZEALAND DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:16.776.65.6
– Percent of Open Interest Shorts:64.828.45.7
– Net Position:-34,29434,376-82
– Gross Longs:11,88354,5963,988
– Gross Shorts:46,17720,2204,070
– Long to Short Ratio:0.3 to 12.7 to 11.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):25.772.851.3
– Strength Index Reading (3 Year Range):BearishBullishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:11.1-11.910.5

 

Mexican Peso Futures:

Mexican Peso Futures COT ChartThe Mexican Peso large speculator standing this week recorded a net position of 90,592 contracts in the data reported through Tuesday. This was a weekly lowering of -12,522 contracts from the previous week which had a total of 103,114 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 72.6 percent. The commercials are Bearish with a score of 27.3 percent and the small traders (not shown in chart) are Bullish with a score of 51.7 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

MEXICAN PESO StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:58.637.33.4
– Percent of Open Interest Shorts:18.579.71.1
– Net Position:90,592-95,8035,211
– Gross Longs:132,39284,2247,660
– Gross Shorts:41,800180,0272,449
– Long to Short Ratio:3.2 to 10.5 to 13.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):72.627.351.7
– Strength Index Reading (3 Year Range):BullishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-5.95.71.9

 

Brazilian Real Futures:

Brazil Real Futures COT ChartThe Brazilian Real large speculator standing this week recorded a net position of 30,962 contracts in the data reported through Tuesday. This was a weekly lift of 12,117 contracts from the previous week which had a total of 18,845 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 62.5 percent. The commercials are Bearish with a score of 36.2 percent and the small traders (not shown in chart) are Bearish with a score of 44.4 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

BRAZIL REAL StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:65.528.05.9
– Percent of Open Interest Shorts:30.168.21.1
– Net Position:30,962-35,1334,171
– Gross Longs:57,23224,4215,163
– Gross Shorts:26,27059,554992
– Long to Short Ratio:2.2 to 10.4 to 15.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):62.536.244.4
– Strength Index Reading (3 Year Range):BullishBearishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-12.210.411.9

 

Bitcoin Futures:

Bitcoin Crypto Futures COT ChartThe Bitcoin large speculator standing this week recorded a net position of 1,008 contracts in the data reported through Tuesday. This was a weekly lift of 318 contracts from the previous week which had a total of 690 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 74.1 percent. The commercials are Bearish with a score of 35.1 percent and the small traders (not shown in chart) are Bearish with a score of 35.3 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend.

BITCOIN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:82.22.35.0
– Percent of Open Interest Shorts:77.86.55.2
– Net Position:1,008-968-40
– Gross Longs:18,9395211,151
– Gross Shorts:17,9311,4891,191
– Long to Short Ratio:1.1 to 10.3 to 11.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):74.135.135.3
– Strength Index Reading (3 Year Range):BullishBearishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:31.5-31.6-3.4

 

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Forex and Currency News Opinions
08 Feb

Speculator Extremes: Palladium, CAD, Sugar & Cocoa lead Bullish & Bearish Positions

By InvestMacro

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on February 3rd.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the data table or cot leaders table)

Extreme Bullish Speculator Table

Here Are This Week’s Most Bullish Speculator Positions:

Palladium

Extreme Bullish Leader
The Palladium speculator position comes in as the most bullish extreme standing this week as the Palladium speculator level is currently at a 99 percent score of its 3-year range.

The six-week trend for the percent strength score totaled a gain of 7 percentage points this week. The overall net speculator position was a total of 1,133 net contracts this week with an increase of 449 contract in the weekly speculator bets.

Speculators or Non-Commercials Notes:

Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.

These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

 

Canadian Dollar

Extreme Bullish Leader
The Canadian Dollar speculator position comes next in the extreme standings this week with the CAD speculator level now at a 98 percent score of its 3-year range.

The six-week trend for the percent strength score was a jump by 29 percentage points this week. The speculator position registered 2,130 net contracts this week with a weekly boost of 18,176 contracts in speculator bets.

Steel

Extreme Bullish Leader
The Steel speculator position comes in third this week in the extreme standings. The Steel speculator level resides at a 96 percent score of its 3-year range.

The six-week trend for the strength score came in at an increase by 8 percentage points this week. The overall speculator position was 11,487 net contracts this week with a dip of -853 contracts in the weekly speculator bets.

MSCI EAFE MINI

Extreme Bullish Leader
The MSCI EAFE MINI speculator position comes up number four in the extreme standings this week. The MSCI EAFE-Mini speculator level is at a 96 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a rise of 6 percentage points this week. The overall speculator position was 25,855 net contracts this week with a rise of 1,965 contracts in the speculator bets.

Australian Dollar

Extreme Bullish Leader
The Australian Dollar speculator position rounds out the top five in this week’s bullish extreme standings. The AUD speculator level sits at a 95 percent score of its 3-year range while the six-week trend for the speculator strength score was a jump of 34 percentage points this week.

The speculator position was 26,118 net contracts this week with a strong gain of 18,972 contracts in the weekly speculator bets.

The Most Bearish Speculator Positions of the Week:

Extreme Bearish Speculator Table

Sugar

Extreme Bearish Leader
The Sugar speculator position comes in as the most bearish extreme standing this week with the Sugar speculator level is at a minimum 0 percent score of its 3-year range.

The six-week trend for the speculator strength score was a drop by -12 percentage points this week. The overall speculator position was -210,289 net contracts this week with a fall of -42,536 contracts in the speculator bets.

Cocoa Futures

Extreme Bearish Leader
The Cocoa Futures speculator position comes in next for the most bearish extreme standing on the week as the Cocoa speculator level is at a 3 percent score of its 3-year range.

The six-week trend for the speculator strength score was a decline of -16 percentage points this week. The speculator position was -14,508 net contracts this week with a rise of 994 contracts in the weekly speculator bets.

Cotton

Extreme Bearish Leader
The Cotton speculator position comes in as third most bearish extreme standing of the week. The Cotton speculator level resides at a 14 percent score of its 3-year range.

The six-week trend for the speculator strength score was a decline of -7 percentage points this week while the overall speculator position was -42,744 net contracts this week with a decrease of -3,777 contracts in the speculator bets.

2-Year Bond

Extreme Bearish Leader
The 2-Year Bond speculator position comes in as this week’s fourth most bearish extreme standing. The 2-Year speculator level is at a 14 percent score of its 3-year range.

The six-week trend for the speculator strength score was an edge higher by 1 percentage point this week. The speculator position was -1,347,602 net contracts this week with a decline of -128,603 contracts in the weekly speculator bets.

Natural Gas

Extreme Bearish Leader
Next, the Natural Gas speculator position comes in as the fifth most bearish extreme standing for this week with the Natural Gas speculator level at a 15 percent score of its 3-year range.

The six-week trend for the speculator strength score was a fall by -11 percentage points this week while the speculator position was -172,310 net contracts this week with a decrease by -8,704 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Opinions
06 Feb

Data centers told to pitch in as storms and cold weather boost power demand

By Nikki Luke, University of Tennessee and Conor Harrison, University of South Carolina 

As Winter Storm Fern swept across the United States in late January 2026, bringing ice, snow and freezing temperatures, it left more than a million people without power, mostly in the Southeast.

Scrambling to meet higher than average demand, PJM, the nonprofit company that operates the grid serving much of the mid-Atlantic U.S., asked for federal permission to generate more power, even if it caused high levels of air pollution from burning relatively dirty fuels.

Energy Secretary Chris Wright agreed and took another step, too. He authorized PJM and ERCOT – the company that manages the Texas power grid – as well as Duke Energy, a major electricity supplier in the Southeast, to tell data centers and other large power-consuming businesses to turn on their backup generators.

The goal was to make sure there was enough power available to serve customers as the storm hit. Generally, these facilities power themselves and do not send power back to the grid. But Wright explained that their “industrial diesel generators” could “generate 35 gigawatts of power, or enough electricity to power many millions of homes.”

We are scholars of the electricity industry who live and work in the Southeast. In the wake of Winter Storm Fern, we see opportunities to power data centers with less pollution while helping communities prepare for, get through and recover from winter storms.

Data centers use enormous quantities of energy

Before Wright’s order, it was hard to say whether data centers would reduce the amount of electricity they take from the grid during storms or other emergencies.

This is a pressing question, because data centers’ power demands to support generative artificial intelligence are already driving up electricity prices in congested grids like PJM’s.

And data centers are expected to need only more power. Estimates vary widely, but the Lawrence Berkeley National Lab anticipates that the share of electricity production in the U.S. used by data centers could spike from 4.4% in 2023 to between 6.7% and 12% by 2028. PJM expects a peak load growth of 32 gigawatts by 2030 – enough power to supply 30 million new homes, but nearly all going to new data centers. PJM’s job is to coordinate that energy – and figure out how much the public, or others, should pay to supply it.

The race to build new data centers and find the electricity to power them has sparked enormous public backlash about how data centers will inflate household energy costs. Other concerns are that power-hungry data centers fed by natural gas generators can hurt air quality, consume water and intensify climate damage. Many data centers are located, or proposed, in communities already burdened by high levels of pollution.

Local ordinances, regulations created by state utility commissions and proposed federal laws have tried to protect ratepayers from price hikes and require data centers to pay for the transmission and generation infrastructure they need.

Always-on connections?

In addition to placing an increasing burden on the grid, many data centers have asked utility companies for power connections that are active 99.999% of the time.

But since the 1970s, utilities have encouraged “demand response” programs, in which large power users agree to reduce their demand during peak times like Winter Storm Fern. In return, utilities offer financial incentives such as bill credits for participation.

Over the years, demand response programs have helped utility companies and power grid managers lower electricity demand at peak times in summer and winter. The proliferation of smart meters allows residential customers and smaller businesses to participate in these efforts as well. When aggregated with rooftop solar, batteries and electric vehicles, these distributed energy resources can be dispatched as “virtual power plants.”

A different approach

The terms of data center agreements with local governments and utilities often aren’t available to the public. That makes it hard to determine whether data centers could or would temporarily reduce their power use.

In some cases, uninterrupted access to power is necessary to maintain critical data systems, such as medical records, bank accounts and airline reservation systems.

Yet, data center demand has spiked with the AI boom, and developers have increasingly been willing to consider demand response. In August 2025, Google announced new agreements with Indiana Michigan Power and the Tennessee Valley Authority to provide “data center demand response by targeting machine learning workloads,” shifting “non-urgent compute tasks” away from times when the grid is strained. Several new companies have also been founded specifically to help AI data centers shift workloads and even use in-house battery storage to temporarily move data centers’ power use off the grid during power shortages.

Flexibility for the future

One study has found that if data centers would commit to using power flexibly, an additional 100 gigawatts of capacity – the amount that would power around 70 million households – could be added to the grid without adding new generation and transmission.

In another instance, researchers demonstrated how data centers could invest in offsite generation through virtual power plants to meet their generation needs. Installing solar panels with battery storage at businesses and homes can boost available electricity more quickly and cheaply than building a new full-size power plant. Virtual power plants also provide flexibility as grid operators can tap into batteries, shift thermostats or shut down appliances in periods of peak demand. These projects can also benefit the buildings where they are hosted.

Distributed energy generation and storage, alongside winterizing power lines and using renewables, are key ways to help keep the lights on during and after winter storms.

Those efforts can make a big difference in places like Nashville, Tennessee, where more than 230,000 customers were without power at the peak of outages during Fern, not because there wasn’t enough electricity for their homes but because their power lines were down.

The future of AI is uncertain. Analysts caution that the AI industry may prove to be a speculative bubble: If demand flatlines, they say, electricity customers may end up paying for grid improvements and new generation built to meet needs that would not actually exist.

Onsite diesel generators are an emergency solution for large users such as data centers to reduce strain on the grid. Yet, this is not a long-term solution to winter storms. Instead, if data centers, utilities, regulators and grid operators are willing to also consider offsite distributed energy to meet electricity demand, then their investments could help keep energy prices down, reduce air pollution and harm to the climate, and help everyone stay powered up during summer heat and winter cold.The Conversation

About the Author:

Nikki Luke, Assistant Professor of Human Geography, University of Tennessee and Conor Harrison, Associate Professor of Economic Geography, University of South Carolina

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Opinions Programming
05 Feb

Your brain can be trained, much like your muscles – a neurologist explains how to boost your brain health

By Joanna Fong-Isariyawongse, University of Pittsburgh 

If you have ever lifted a weight, you know the routine: challenge the muscle, give it rest, feed it and repeat. Over time, it grows stronger.

Of course, muscles only grow when the challenge increases over time. Continually lifting the same weight the same way stops working.

It might come as a surprise to learn that the brain responds to training in much the same way as our muscles, even though most of us never think about it that way. Clear thinking, focus, creativity and good judgment are built through challenge, when the brain is asked to stretch beyond routine rather than run on autopilot. That slight mental discomfort is often the sign that the brain is actually being trained, a lot like that good workout burn in your muscles.

Think about walking the same loop through a local park every day. At first, your senses are alert. You notice the hills, the trees, the changing light. But after a few loops, your brain checks out. You start planning dinner, replaying emails or running through your to-do list. The walk still feels good, but your brain is no longer being challenged.

Routine feels comfortable, but comfort and familiarity alone do not build new brain connections.

As a neurologist who studies brain activity, I use electroencephalograms, or EEGs, to record the brain’s electrical patterns.

Research in humans shows that these rhythms are remarkably dynamic. When someone learns a new skill, EEG rhythms often become more organized and coordinated. This reflects the brain’s attempt to strengthen pathways needed for that skill.

Your brain trains in zones too

For decades, scientists believed that the brain’s ability to grow and reorganize, called neuroplasticity, was largely limited to childhood. Once the brain matured, its wiring was thought to be largely fixed.

But that idea has been overturned. Decades of research show that adult brains can form new connections and reorganize existing networks, under the right conditions, throughout life.

Some of the most influential work in this field comes from enriched environment studies in animals. Rats housed in stimulating environments filled with toys, running wheels and social interaction developed larger, more complex brains than rats kept in standard cages. Their brains adapted because they were regularly exposed to novelty and challenge.

Human studies find similar results. Adults who take on genuinely new challenges, such as learning a language, dancing or practicing a musical instrument, show measurable increases in brain volume and connectivity on MRI scans.

The takeaway is simple: Repetition keeps the brain running, but novelty pushes the brain to adapt, forcing it to pay attention, learn and problem-solve in new ways. Neuroplasticity thrives when the brain is nudged just beyond its comfort zone.

The reality of neural fatigue

Just like muscles, the brain has limits. It does not get stronger from endless strain. Real growth comes from the right balance of challenge and recovery.

When the brain is pushed for too long without a break – whether that means long work hours, staying locked onto the same task or making nonstop decisions under pressure – performance starts to slip. Focus fades. Mistakes increase. To keep you going, the brain shifts how different regions work together, asking some areas to carry more of the load. But that extra effort can still make the whole network run less smoothly.

Neural fatigue is more than feeling tired. Brain imaging studies show that during prolonged mental work, the networks responsible for attention and decision-making begin to slow down, while regions that promote rest and reward-seeking take over. This shift helps explain why mental exhaustion often comes with stronger cravings for quick rewards, like sugary snacks, comfort foods or mindless scrolling. The result is familiar: slower thinking, more mistakes, irritability and mental fog.

This is where the muscle analogy becomes especially useful. You wouldn’t do squats for six hours straight, because your leg muscles would eventually give out. As they work, they build up byproducts that make each contraction a little less effective until you finally have to stop. Your brain behaves in a similar way.

Likewise, in the brain, when the same cognitive circuits are overused, chemical signals build up, communication slows and learning stalls.

But rest allows those strained circuits to reset and function more smoothly over time. And taking breaks from a taxing activity does not interrupt learning. In fact, breaks are critical for efficient learning.

The crucial importance of rest

Among all forms of rest, sleep is the most powerful.

Sleep is the brain’s night shift. While you rest, the brain takes out the trash through a special cleanup system called the glymphatic system that clears away waste and harmful proteins. Sleep also restores glycogen, a critical fuel source for brain cells.

And importantly, sleep is when essential repair work happens. Growth hormone surges during deep sleep, supporting tissue repair. Immune cells regroup and strengthen their activity.

During REM sleep, the stage of sleep linked to dreaming, the brain replays patterns from the day to consolidate memories. This process is critical not only for cognitive skills like learning an instrument but also for physical skills like mastering a move in sports.

On the other hand, chronic sleep deprivation impairs attention, disrupts decision-making and alters the hormones that regulate appetite and metabolism. This is why fatigue drives sugar cravings and late-night snacking.

Sleep is not an optional wellness practice. It is a biological requirement for brain performance.

Exercise feeds the brain too

Exercise strengthens the brain as well as the body.

Physical activity increases levels of brain-derived neurotrophic factor, or BDNF, a protein that acts like fertilizer for neurons. It promotes the growth of new connections, increases blood flow, reduces inflammation and helps the brain remain adaptable across one’s lifespan.

This is why exercise is one of the strongest lifestyle tools for protecting cognitive health.

Train, recover, repeat

The most important lesson from this science is simple. Your brain is not passively wearing down with age. It is constantly remodeling itself in response to how you use it. Every new challenge and skill you try, every real break, every good night of sleep sends a signal that growth is still expected.

You do not need expensive brain training programs or radical lifestyle changes. Small, consistent habits matter more. Try something unfamiliar. Vary your routines. Take breaks before exhaustion sets in. Move your body. Treat sleep as nonnegotiable.

So the next time you lace up your shoes for a familiar walk, consider taking a different path. The scenery may change only slightly, but your brain will notice. That small detour is often all it takes to turn routine into training.

The brain stays adaptable throughout life. Cognitive resilience is not fixed at birth or locked in early adulthood. It is something you can shape.

If you want a sharper, more creative, more resilient brain, you do not need to wait for a breakthrough drug or a perfect moment. You can start now, with choices that tell your brain that growth is still the plan.The Conversation

About the Author: 

Joanna Fong-Isariyawongse, Associate Professor of Neurology, University of Pittsburgh

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Economics & Fundamentals Opinions
04 Feb

The world is in water bankruptcy, UN scientists report – here’s what that means

By Kaveh Madani, United Nations University 

The world is now using so much fresh water amid the consequences of climate change that it has entered an era of water bankruptcy, with many regions no longer able to bounce back from frequent water shortages.

About 4 billion people – nearly half the global population – live with severe water scarcity for at least one month a year, without access to sufficient water to meet all of their needs. Many more people are seeing the consequences of water deficit: dry reservoirs, sinking cities, crop failures, water rationing and more frequent wildfires and dust storms in drying regions.

Water bankruptcy signs are everywhere, from Tehran, where droughts and unsustainable water use have depleted reservoirs the Iranian capital relies on, adding fuel to political tensions, to the U.S., where water demand has outstripped the supply in the Colorado River, a crucial source of drinking water and irrigation for seven states.

A woman fills containers with water from a well. cows are behind her on a dry landscape.
Droughts have made finding water for cattle more difficult and have led to widespread malnutrition in parts of Ethiopia in recent years. In 2022, UNICEF estimated that as many as 600,000 children would require treatment for severe malnutrition.
Demissew Bizuwerk/UNICEF Ethiopia, CC BY

Water bankruptcy is not just a metaphor for water deficit. It is a chronic condition that develops when a place uses more water than nature can reliably replace, and when the damage to the natural assets that store and filter that water, such as aquifers and wetlands, becomes hard to reverse.

A new study I led with the United Nations University Institute for Water, Environment and Health concludes that the world has now gone beyond temporary water crises. Many natural water systems are no longer able to return to their historical conditions. These systems are in a state of failure – water bankruptcy.

Kaveh Madani, director of the United Nations University Institute for Water, Environment and Health, explains the concept of “water bankruptcy.” TVRI World.

What water bankruptcy looks like in real life

In financial bankruptcy, the first warning signs often feel manageable: late payments, borrowed money and selling things you hoped to keep. Then the spiral tightens.

Water bankruptcy has similar stages.

At first, we pull a little more groundwater during dry years. We use bigger pumps and deeper wells. We transfer water from one basin to another. We drain wetlands and straighten rivers to make space for farms and cities.

Then the hidden costs show up. Lakes shrink year after year. Wells need to go deeper. Rivers that once flowed year-round turn seasonal. Salty water creeps into aquifers near the coast. The ground itself starts to sink.

How the Aral Sea shrank from 2000 to 2011. It was once closer to oval, covering the light-colored areas as recently as the 1980s, but overuse for agriculture by multiple countries drew it down.
NASA

That last one, subsidence, often surprises people. But it’s a signature of water bankruptcy. When groundwater is overpumped, the underground structure, which holds water almost like a sponge, can collapse. In Mexico City, land is sinking by about 10 inches (25 centimeters) per year. Once the pores become compacted, they can’t simply be refilled.

The Global Water Bankruptcy report, published on Jan. 20, 2026, documents how widespread this is becoming. Groundwater extraction has contributed to significant land subsidence over more than 2.3 million square miles (6 million square kilometers), including urban areas where close to 2 billion people live. Jakarta, Bangkok and Ho Chi Minh City are among the well-known examples in Asia.

A large sinkhole near farm fields.
A sinkhole in Turkey’s agricultural heartland shows how the landscape can collapse when more groundwater is extracted than nature can replenish.
Ekrem07, 2023, Wikimedia Commons, CC BY

Agriculture is the world’s biggest water user, responsible for about 70% of the global freshwater withdrawals. When a region goes water bankrupt, farming becomes more difficult and more expensive. Farmers lose jobs, tensions rise and national security can be threatened.

About 3 billion people and more than half of global food production are concentrated in areas where water storage is already declining or unstable. More than 650,000 square miles (1.7 million square kilometers) of irrigated cropland are under high or very high water stress. That threatens the stability of food supplies around the world.

Droughts are also increasing in duration, frequency and intensity as global temperatures rise. Over 1.8 billion people – nearly 1 in 4 humans – dealt with drought conditions at various times from 2022 to 2023.

These numbers translate into real problems: higher food prices, hydroelectricity shortages, health risks, unemployment, migration pressures, unrest and conflicts.

Is the world ready to cope with water-related national security risks? CNN.

How did we get here?

Every year, nature gives each region a water income, depositing rain and snow. Think of this like a checking account. This is how much water we receive each year to spend and share with nature.

When demand rises, we might borrow from our savings account. We take out more groundwater than will be replaced. We steal the share of water needed by nature and drain wetlands in the process. That can work for a while, just as debt can finance a wasteful lifestyle for a while.

Those long-term water sources are now disappearing. The world has lost more than 1.5 million square miles (4.1 million square kilometers) of natural wetlands over five decades. Wetlands don’t just hold water. They also clean it, buffer floods and support plants and wildlife.

Water quality is also declining. Pollution, saltwater intrusion and soil salinization can result in water that is too dirty and too salty to use, contributing to water bankruptcy.

A map shows most of Africa, South Asia and large parts of the Western U.S. have high levels of water-related risks.
Overall water-risk scores reflect the aggregate value of water quantity, water quality and regulatory and reputational risks to water supplies. Higher values indicate greater water-related risks.
United Nations University Institute for Water, Environment and Health, based on Aqueduct 4.0, CC BY

Climate change is exacerbating the situation by reducing precipitation in many areas of the world. Warming increases the water demand of crops and the need for electricity to pump more water. It also melts glaciers that store fresh water.

Despite these problems, nations continue to increase water withdrawals to support the expansion of cities, farmland, industries and now data centers.

Not all water basins and nations are water bankrupt, but basins are interconnected through trade, migration, climate and other key elements of nature. Water bankruptcy in one area will put more pressure on others and can increase local and international tensions.

What can be done?

Financial bankruptcy ends by transforming spending. Water bankruptcy needs the same approach:

  • Stop the bleeding: The first step is admitting the balance sheet is broken. That means setting water use limits that reflect how much water is actually available, rather than just drilling deeper and shifting the burden to the future.
  • Protect natural capital – not just the water: Protecting wetlands, restoring rivers, rebuilding soil health and managing groundwater recharge are not just nice-to-haves. They are essential to maintaining healthy water supplies, as is a stable climate.
A woman pushes a wheelbarrow with a contain filled with freshwater. The ocean is behind her in the view.
In small island states like the Maldives, sea-level rise threatens water supplies when salt water gets into underground aquifers, ruining wells.
UNDP Maldives 2021, CC BY
  • Use less, but do it fairly: Managing water demand has become unavoidable in many places, but water bankruptcy plans that cut supplies to the poor while protecting the powerful will fail. Serious approaches include social protections, support for farmers to transition to less water-intensive crops and systems, and investment in water efficiency.
  • Measure what matters: Many countries still manage water with partial information. Satellite remote sensing can monitor water supplies and trends, and provide early warnings about groundwater depletion, land subsidence, wetland loss, glacier retreat and water quality decline.
  • Plan for less water: The hardest part of bankruptcy is psychological. It forces us to let go of old baselines. Water bankruptcy requires redesigning cities, food systems and economies to live within new limits before those limits tighten further.

With water, as with finance, bankruptcy can be a turning point. Humanity can keep spending as if nature offers unlimited credit, or it can learn to live within its hydrological means.The Conversation

About the Author: 

Kaveh Madani, Director of the Institute for Water, Environment and Health, United Nations University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Economics & Fundamentals Opinions
03 Feb

3 things to know about Kevin Warsh, Trump’s nod for Fed chair

By D. Brian Blank, Mississippi State University and Brandy Hadley, Appalachian State University 

After months of speculation, President Donald Trump nominated Kevin Warsh on Jan. 30, 2026, to be the next chair of the Federal Reserve.

If confirmed by Congress, Warsh will inherit leadership of the U.S. central bank at a delicate time. For months, current Fed Chair Jerome Powell has come under attack from the Trump administration for failing to heed the president’s call for lower interest rates. The fight has put into question the central bank’s independence and its role in stewarding the economy.

Powell’s term as chair will end in mid-May, leaving his successor to navigate an economy that has improved on some fronts but remains uneven and uncertain.

But what should America expect from the next Fed chair? Here are three things to note about Trump’s nominee.

1. He is a familiar face …

Warsh brings deep experience with monetary policymaking to the role.

A graduate of Stanford University and Harvard Law School, he served as special assistant to the president for economic policy and executive secretary of the White House National Economic Council under President George W. Bush before becoming one of the youngest members of the Federal Reserve Board of Governors.

Warsh is no newcomer to discussions about Federal Reserve leadership. He was a finalist for the job in 2017, when Trump instead appointed Powell. Trump has since stated that he made a mistake by not selecting Warsh then – though clashes between Trump and Powell may have influenced that view.

Warsh’s credentials are unquestionable. As a governor of the Federal Reserve Board from 2006 to 2011, he worked closely with other policymakers and with Wall Street during the global financial crisis of 2008. Since departing the Fed, he has returned to Stanford as a visiting fellow at the Hoover Institution and a lecturer at the Graduate School of Business, as well as a member of the Panel of Economic Advisers of the Congressional Budget Office.

He also has ties to the finance industry. He began his career in mergers and acquisitions at Morgan Stanley and, since leaving the Fed, has worked as a partner at Duquesne Family Office, an investment firm that manages the personal wealth of hedge fund manager Stanley Druckenmiller and other investors.

In 2016, Trump included Warsh in an economic advisory group assembled during his transition. Critics of Warsh’s nomination point toward his father-in-law, Ronald Lauder, a college friend and donor of the president, as evidence of politicization.

2. … with evolving monetary views

The big question people have is what a Warsh Fed would mean for monetary policy – that is, is it likely to play tight or loose with rates.

When the economy is growing quickly, like in 2021, the Federal Reserve tightens policy by raising interest rates to avoid the kind of economic growth that may not be sustainable long term and can lead to bubbles. However, during downturns, like in 2008 or 2020, the economic policy that can provide a backstop for the economy is looser. The Fed tends to lower rates in these situations, which supports growth.

Warsh’s views on monetary policy have long been considered hawkish, meaning he is inclined toward tighter policy and generally higher interest rates to keep inflation in check, even at the expense of slower economic growth. During his previous tenure at the Fed, he signaled concern about expansive monetary tools such as quantitative easing, in which the central bank buys Treasurys and other securities to stimulate the economy. This resulted in what Warsh called a “bloated” Fed balance sheet that held almost US$9 trillion of debt at its peak in 2022.

In recent public remarks leading up to his nomination, however, he has increasingly aligned in part with Trump’s push for lower interest rates and discussed establishing a new Treasury-Fed Accord, like in 1951, when Fed independence from fiscal authorities such as the Treasury Department was established.

3. His nod highlights fight over Fed independence

A central question surrounding this nomination is whether it promotes the politicization of the Federal Reserve.

The Fed’s independence from day-to-day political pressure has long been viewed as a cornerstone of U.S. economic policymaking. Decisions about interest rates, inflation control and financial stability are insulated from electoral politics for that reason. A truly independent Fed can resist making decisions that provide a short-term economic bump – something incumbent governments tend to like – but may lead to longer-term economic pain down the road.

The Fed tends to use its monetary policy tools carefully. Yet politicians tend to want looser monetary policy so the economy grows fast and they get credit for it.

And Warsh’s nomination can be seen in the context of a broader push from the executive branch to exert greater influence over monetary policy. Given Trump’s public criticism of Powell and vocal calls for his early departure, the president almost certainly intended to nominate someone who would lower interest rates according to preferences stated by the administration.

Critics of the nomination have argued that Warsh has a tendency to be more opportunistic with his policy views than Powell and other economists, who try to ignore political preferences.

As such, Warsh’s nomination encapsulates more than just a leadership transition. It highlights the ongoing tensions between political priorities and the traditional economic playbook, between short-term growth pressures and long-term stability, and between institutional independence and democratic accountability.

Time will tell whether he turns out to be hawkish or politically motivated as chair, if he is confirmed.The Conversation

About the Author:

D. Brian Blank, Associate Professor of Finance, Mississippi State University and Brandy Hadley, Associate Professor of Finance and Distinguished Scholar of Applied Investments, Appalachian State University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Economics & Fundamentals Opinions
01 Feb

Australian Dollar Speculator bets go bullish for 1st time in 59 Weeks

By InvestMacro

Speculators OI FX Futures COT Chart

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday January 27th and shows a quick view of how large market participants (for-profit speculators and commercial traders) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the euro will decline versus the dollar.

Weekly Speculator Changes led by Canadian Dollar, Australian Dollar & Euro

Speculators Nets FX Futures COT Chart
The COT currency market speculator bets were overall decisively higher this week as ten out of the eleven currency markets we cover had higher positioning while the other one markets had lower speculator contracts.

Leading the gains for the currency markets was the Canadian Dollar (25,739 contracts) with the Australian Dollar (21,157 contracts), the EuroFX (20,439 contracts), the Japanese Yen (10,896 contracts), the British Pound (5,818 contracts), the US Dollar Index (2,013 contracts), the New Zealand Dollar (1,865 contracts), the Brazilian Real (1,204 contracts), Bitcoin (392 contracts),  and with the Swiss Franc (314 contracts) also showing positive weeks.

The only currency seeing a decline in speculator bets on the week was the Mexican Peso with a decrease of -4,039 contracts.

NZD leads Price Performance Returns for FX this week

In the currency markets this week, the New Zealand Dollar saw the biggest rise on the week with a 1.25% gain in the past five days. The Swiss Franc was higher by 1.12%, followed by the Australian Dollar which rose by 1.01%. The Japanese Yen came in next with a 0.67% rise, followed by the Canadian Dollar which increased by 0.60% on the week, while the Brazilian Real was up by 0.59%. The British Pound also saw a small gain this week with a 0.34% rise, and the Euro rounds out the gainers with a 0.27% increase.

On the downside, the US Dollar Index was virtually unchanged with a small decline of -0.22%, followed by the Mexican Peso which fell by -0.59%. Bitcoin was the biggest loser on the week with a -6.27% drop.

FX COT Data Roundup: Australian Dollar Speculator bets go bullish for 1st time in 59 Weeks

Highlighting this week’s currency speculated data was strong rises in speculative bets for the Canadian Dollar, the Australian Dollar and the Euro.

– The Canadian Dollar speculative bets surged the most this week by over 25,000 contracts. This is the second straight week of increases, as well as the seventh time out of the last nine weeks that bets have improved. Overall, the CAD speculator data have been highly negative, with bets being in bearish territory for the past 130 consecutive weeks, dating back to August 1st of 2023. But there has been a sharp turnaround since the end of 2025 as the bearish bets have fallen from a -130,600 on December 9th to this week’s speculative standing at just -16,046 contracts. This is the least bearish position for the Canadian Dollar speculators since February of 2024. In the exchange rate markets, the CAD trades right around the exchange rate of 0.7373 to close out this week. This roughly coincides with the 200-weekly moving average and a close above the 200-weekly moving average would be the first time the Canadian Dollar has been above this measure since August of 2022.

– The Australian Dollar speculative bets jumped by over 21,000 contracts this week and rose for the ninth consecutive week. In these past nine weeks, the speculator bets have increased by a total of 91,322 net contracts. The positive trend in speculator bets has now pushed the Australian Dollar net standing into a bullish position at 7,146 net contracts which marks the first bullish level for the Australian Dollar in the past 59 weeks, dating back to December 10th of 2024. In the exchange rate markets, the Australian Dollar has had two strong consecutive weekly gains, and this week the AUD touched its highest level (vs the USD) since January of 2023. Overall, the Australian Dollar exchange rate versus the USD has now been above its 200-weekly moving average for the past six weeks, which is the first time it has been multiple weeks over the 200-moving average since 2022.

– The Euro currency speculator position saw a rebound by over 20,000 net contracts this week after falling sharply in the previous two weeks. This week’s gain brings the overall net position level back to 132,134 net contracts, which is right around the average of the past 10 weeks. Overall, this is a strong, bullish position for speculators looking for the euro currency to continue to rise higher. Euro bets have now been in a consecutive net bullish position for 47 straight weeks, dating back to March 11th of 2025. And to illustrate the strength of the speculator sentiment, the Euro position has now been over the +100,000 net contract level for 29 out of the last 33 weeks. In the foreign exchange markets this week, the Euro briefly touched its highest level since June of 2021 at over the 1.2100 exchange rate. However, the Euro faltered to end the week with a few down days in a row and closed out trading at the 1.1893 exchange rate versus the US Dollar. Since the beginning of 2025, the Euro was now higher by approximately 16.5% and is up by just about 1% this month, ending January 31st.

– The US Dollar Index speculative bets rose this week after a decline last week, and have actually been higher in eight out of the last nine weeks. Overall, the US Dollar Index speculative positions have now been in a negative net standing for 33 consecutive weeks, dating back to June of 2025. In the exchange rate markets, the Dollar fell by a modest amount this week. And despite touching its lowest level since 2022 around the 95.36 exchange rate, the Dollar Index rallied at the end of the week to close out around the 96.86 price level. Likely helping the US Dollar strength on Friday was a steep sell-off in the precious metals markets to close out the week while also affecting the USD (and going forward) was the announcement of a nomination of a new Federal Reserve Chairman in Kevin Warsh.

Currencies Data:

Speculators FX Futures COT Data Table
Legend: Open Interest | Speculators Current Net Position | Weekly Specs Change | Specs Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by Canadian Dollar & Australian Dollar

Speculators Strength Scores FX Futures COT Chart
COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the Canadian Dollar (89 percent) and the Australian Dollar (81 percent) lead the currency markets this week. The Mexican Peso (80 percent), EuroFX (79 percent) and Bitcoin (67 percent) come in as the next highest in the weekly strength scores.

On the downside, the New Zealand Dollar (10 percent) and the Swiss Franc (14 percent) come in at the lowest strength levels currently and are in Extreme-Bearish territory (below 20 percent). The next lowest strength scores are the US Dollar Index (32 percent) and the British Pound (33 percent).

3-Year Strength Statistics:
US Dollar Index (32.2 percent) vs US Dollar Index previous week (26.8 percent)
EuroFX (79.1 percent) vs EuroFX previous week (71.3 percent)
British Pound Sterling (32.7 percent) vs British Pound Sterling previous week (30.3 percent)
Japanese Yen (41.4 percent) vs Japanese Yen previous week (38.4 percent)
Swiss Franc (14.0 percent) vs Swiss Franc previous week (13.3 percent)
Canadian Dollar (88.9 percent) vs Canadian Dollar previous week (76.2 percent)
Australian Dollar (81.4 percent) vs Australian Dollar previous week (66.4 percent)
New Zealand Dollar (10.3 percent) vs New Zealand Dollar previous week (8.2 percent)
Mexican Peso (80.1 percent) vs Mexican Peso previous week (82.3 percent)
Brazilian Real (53.6 percent) vs Brazilian Real previous week (52.8 percent)
Bitcoin (67.3 percent) vs Bitcoin previous week (59.0 percent)

Canadian Dollar & Australian Dollar top the 6-Week Strength Trends

Speculators Trends FX Futures COT Chart
COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the Canadian Dollar (35 percent) and the Australian Dollar (21 percent) lead the past six weeks trends for the currencies. The British Pound (14 percent), Bitcoin (12 percent) and the Mexican Peso (9 percent) are the next highest positive movers in the 3-Year trends data.

The Brazilian Real (-21 percent) leads the downside trend scores currently with the Japanese Yen (-9 percent), Swiss Franc (-8 percent) and the EuroFX (-5 percent) following next with lower trend scores.

3-Year Strength Trends:
US Dollar Index (0.5 percent) vs US Dollar Index previous week (20.1 percent)
EuroFX (-4.9 percent) vs EuroFX previous week (-10.3 percent)
British Pound Sterling (13.7 percent) vs British Pound Sterling previous week (22.7 percent)
Japanese Yen (-8.5 percent) vs Japanese Yen previous week (-17.1 percent)
Swiss Franc (-8.1 percent) vs Swiss Franc previous week (-9.3 percent)
Canadian Dollar (34.8 percent) vs Canadian Dollar previous week (43.8 percent)
Australian Dollar (20.6 percent) vs Australian Dollar previous week (34.7 percent)
New Zealand Dollar (0.3 percent) vs New Zealand Dollar previous week (8.2 percent)
Mexican Peso (8.7 percent) vs Mexican Peso previous week (0.1 percent)
Brazilian Real (-21.2 percent) vs Brazilian Real previous week (-29.0 percent)
Bitcoin (12.4 percent) vs Bitcoin previous week (0.7 percent)

Individual COT Forex Markets:

US Dollar Index Futures:

US Dollar Index Forex Futures COT ChartThe US Dollar Index large speculator standing this week equaled a net position of -4,405 contracts in the data reported through Tuesday. This was a weekly lift of 2,013 contracts from the previous week which had a total of -6,418 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 32.2 percent. The commercials are Bullish with a score of 70.4 percent and the small traders (not shown in chart) are Bearish with a score of 23.2 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend.

US DOLLAR INDEX StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:56.528.98.9
– Percent of Open Interest Shorts:70.412.811.1
– Net Position:-4,4055,087-682
– Gross Longs:17,9459,1632,838
– Gross Shorts:22,3504,0763,520
– Long to Short Ratio:0.8 to 12.2 to 10.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):32.270.423.2
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:0.5-0.3-1.3

 

Euro Currency Futures:

Euro Currency Futures COT ChartThe Euro Currency large speculator standing this week equaled a net position of 132,134 contracts in the data reported through Tuesday. This was a weekly gain of 20,439 contracts from the previous week which had a total of 111,695 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 79.1 percent. The commercials are Bearish-Extreme with a score of 19.3 percent and the small traders (not shown in chart) are Bullish with a score of 78.9 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

EURO Currency StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:31.654.410.2
– Percent of Open Interest Shorts:17.274.14.9
– Net Position:132,134-181,60449,470
– Gross Longs:290,336499,73294,116
– Gross Shorts:158,202681,33644,646
– Long to Short Ratio:1.8 to 10.7 to 12.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):79.119.378.9
– Strength Index Reading (3 Year Range):BullishBearish-ExtremeBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-4.94.9-3.6

 

British Pound Sterling Futures:

British Pound Sterling Futures COT ChartThe British Pound Sterling large speculator standing this week equaled a net position of -16,162 contracts in the data reported through Tuesday. This was a weekly rise of 5,818 contracts from the previous week which had a total of -21,980 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 32.7 percent. The commercials are Bullish with a score of 62.3 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 81.1 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

BRITISH POUND StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:39.143.316.3
– Percent of Open Interest Shorts:46.340.911.5
– Net Position:-16,1625,46410,698
– Gross Longs:87,78697,21636,620
– Gross Shorts:103,94891,75225,922
– Long to Short Ratio:0.8 to 11.1 to 11.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):32.762.381.1
– Strength Index Reading (3 Year Range):BearishBullishBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:13.7-17.532.8

 

Japanese Yen Futures:

Japanese Yen Forex Futures COT ChartThe Japanese Yen large speculator standing this week equaled a net position of -33,933 contracts in the data reported through Tuesday. This was a weekly boost of 10,896 contracts from the previous week which had a total of -44,829 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 41.4 percent. The commercials are Bullish with a score of 57.7 percent and the small traders (not shown in chart) are Bullish with a score of 55.5 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

JAPANESE YEN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:34.741.614.2
– Percent of Open Interest Shorts:46.032.711.8
– Net Position:-33,93326,7097,224
– Gross Longs:104,460125,15742,786
– Gross Shorts:138,39398,44835,562
– Long to Short Ratio:0.8 to 11.3 to 11.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):41.457.755.5
– Strength Index Reading (3 Year Range):BearishBullishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-8.57.9-1.2

 

Swiss Franc Futures:

Swiss Franc Forex Futures COT ChartThe Swiss Franc large speculator standing this week equaled a net position of -42,893 contracts in the data reported through Tuesday. This was a weekly lift of 314 contracts from the previous week which had a total of -43,207 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 14.0 percent. The commercials are Bullish with a score of 68.6 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 80.8 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

SWISS FRANC StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:10.170.519.3
– Percent of Open Interest Shorts:54.726.418.8
– Net Position:-42,89342,406487
– Gross Longs:9,72467,80518,510
– Gross Shorts:52,61725,39918,023
– Long to Short Ratio:0.2 to 12.7 to 11.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):14.068.680.8
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullishBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-8.13.38.3

 

Canadian Dollar Futures:

Canadian Dollar Forex Futures COT ChartThe Canadian Dollar large speculator standing this week equaled a net position of -16,046 contracts in the data reported through Tuesday. This was a weekly advance of 25,739 contracts from the previous week which had a total of -41,785 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 88.9 percent. The commercials are Bearish-Extreme with a score of 16.3 percent and the small traders (not shown in chart) are Bullish with a score of 51.8 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

CANADIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:34.052.212.6
– Percent of Open Interest Shorts:41.046.111.5
– Net Position:-16,04613,7342,312
– Gross Longs:77,169118,53928,551
– Gross Shorts:93,215104,80526,239
– Long to Short Ratio:0.8 to 11.1 to 11.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):88.916.351.8
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:34.8-34.622.1

 

Australian Dollar Futures:

Australian Dollar Forex Futures COT ChartThe Australian Dollar large speculator standing this week equaled a net position of 7,146 contracts in the data reported through Tuesday. This was a weekly boost of 21,157 contracts from the previous week which had a total of -14,011 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 81.4 percent. The commercials are Bearish-Extreme with a score of 13.1 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 89.6 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

AUSTRALIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:43.639.716.1
– Percent of Open Interest Shorts:40.750.97.7
– Net Position:7,146-28,30921,163
– Gross Longs:109,806100,02640,630
– Gross Shorts:102,660128,33519,467
– Long to Short Ratio:1.1 to 10.8 to 12.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):81.413.189.6
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:20.6-17.81.9

 

New Zealand Dollar Futures:

New Zealand Dollar Forex Futures COT ChartThe New Zealand Dollar large speculator standing this week equaled a net position of -47,745 contracts in the data reported through Tuesday. This was a weekly increase of 1,865 contracts from the previous week which had a total of -49,610 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 10.3 percent. The commercials are Bullish-Extreme with a score of 89.1 percent and the small traders (not shown in chart) are Bearish with a score of 37.7 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

NEW ZEALAND DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:14.180.84.3
– Percent of Open Interest Shorts:69.923.65.6
– Net Position:-47,74548,868-1,123
– Gross Longs:12,07469,0853,655
– Gross Shorts:59,81920,2174,778
– Long to Short Ratio:0.2 to 13.4 to 10.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):10.389.137.7
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:0.3-0.41.2

 

Mexican Peso Futures:

Mexican Peso Futures COT ChartThe Mexican Peso large speculator standing this week equaled a net position of 103,114 contracts in the data reported through Tuesday. This was a weekly fall of -4,039 contracts from the previous week which had a total of 107,153 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 80.1 percent. The commercials are Bearish with a score of 20.1 percent and the small traders (not shown in chart) are Bearish with a score of 46.2 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

MEXICAN PESO StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:62.733.63.1
– Percent of Open Interest Shorts:19.378.71.3
– Net Position:103,114-107,3494,235
– Gross Longs:149,09479,8277,389
– Gross Shorts:45,980187,1763,154
– Long to Short Ratio:3.2 to 10.4 to 12.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):80.120.146.2
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:8.7-8.5-2.2

 

Brazilian Real Futures:

Brazil Real Futures COT ChartThe Brazilian Real large speculator standing this week equaled a net position of 18,845 contracts in the data reported through Tuesday. This was a weekly advance of 1,204 contracts from the previous week which had a total of 17,641 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 53.6 percent. The commercials are Bearish with a score of 45.0 percent and the small traders (not shown in chart) are Bearish with a score of 42.7 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend.

BRAZIL REAL StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:46.541.94.1
– Percent of Open Interest Shorts:30.960.70.9
– Net Position:18,845-22,7263,881
– Gross Longs:56,02750,4354,917
– Gross Shorts:37,18273,1611,036
– Long to Short Ratio:1.5 to 10.7 to 14.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):53.645.042.7
– Strength Index Reading (3 Year Range):BullishBearishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-21.220.15.9

 

Bitcoin Futures:

Bitcoin Crypto Futures COT ChartThe Bitcoin large speculator standing this week equaled a net position of 690 contracts in the data reported through Tuesday. This was a weekly lift of 392 contracts from the previous week which had a total of 298 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 67.3 percent. The commercials are Bearish with a score of 43.6 percent and the small traders (not shown in chart) are Bearish with a score of 31.9 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

BITCOIN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:74.43.65.0
– Percent of Open Interest Shorts:71.56.05.4
– Net Position:690-585-105
– Gross Longs:18,0548751,206
– Gross Shorts:17,3641,4601,311
– Long to Short Ratio:1.0 to 10.6 to 10.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):67.343.631.9
– Strength Index Reading (3 Year Range):BullishBearishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:12.4-13.41.0

 

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

COT Updates Forex and Currency News Opinions
← Previous Page
Next Page →