Archive for Opinions – Page 40

27 Sep

Rising electricity demand could bring Three Mile Island and other prematurely shuttered nuclear plants back to life

By Todd Allen, University of Michigan 

Constellation, an energy company that provides electricity and natural gas to customers in 16 states and Washington, announced on Sept. 20, 2024, that it plans to restore and restart Unit 1 at Three Mile Island, a nuclear plant near Middletown, Pennsylvania, that was shut down in 2019. Microsoft has signed a 20-year agreement to purchase electricity generated by the plant to offset power demand from its data centers in the mid-Atlantic region.

Three Mile Island was the site in 1979 of a partial meltdown at the plant’s Unit 2 reactor. The Nuclear Regulatory Commission calls this event “the most serious accident in U.S. commercial nuclear power plant operating history,” although only small amounts of radiation were released, and no health effects on plant workers or the public were detected. Unit 1 was not affected by the accident. University of Michigan nuclear engineering professor Todd Allen explains what restarting Unit 1 will involve, and why some other shuttered nuclear plants may also get new leases on life.

What is the history of TMI-1?

Three Mile Island Unit 1 is a large nuclear power station with the capacity to generate 837 megawatts of electricity – enough to power about 800,000 homes. It started commercial operations in 1974 and ran until September 2019.

After the accident at Unit 2 in 1979, Unit 1 was shut down for six years, until the operator at the time, Metropolitan Edison, demonstrated to the Nuclear Regulatory Commission that it could operate the reactor safely.

Constellation closed Unit 1 down in 2019, even though the plant’s operating license had been extended through 2034 and it had no operational or safety problems. TMI-1 could not compete economically at that point with natural gas-fueled power plants because gas had become extremely cheap.

Pennsylvania also had a policy preference for increasing electricity generation from solar and wind power. The state legislature chose not to reclassify the plant as a carbon-free electricity source, which would have qualified it for state support.

The 1979 accident at Three Mile Island had broad, lasting effects on nuclear power regulation.

What is the reactor’s current condition?

Since the shutdown in 2019, the plant has sat idle. The NRC calls this status safe storage, or SAFSTOR. The plant is shut down, uranium fuel is removed from the reactor, and the facility is maintained in a safe, stable condition. Irradiated fuel is stored in large steel and concrete casks on a physically secured portion of the site, known as an Independent Spent Fuel Storage Installation.

In addition to the fuel, other materials in the plant are radioactive, such as structural channels that direct the cooling water during operation and the large vessel in which the reactor is housed. Radioactive decay occurs during the SAFSTOR period, reducing the plant’s radioactivity and making it easier to dismantle the plant later.

A half-dozen large cylindrical casks on a concrete pad.
The United States does not have a licensed long-term disposal site for spent nuclear fuel, so it is stored in large dry casks on-site at operating and closed reactors.
U.S. Nuclear Regulatory Commission, CC BY

What will Constellation need to do to prepare the reactor to restart?

Constellation will need to ensure that it has enough fuel and sufficiently trained personnel. It also will have to ensure that the reactor’s components are still in a condition that allows for safe operation.

This will require detailed inspections and mandatory maintenance actions to ensure that all components are running correctly. In some cases, the company may need to install new equipment.

The exact work will depend on the results of inspections but could include upgrading or replacing the reactor’s major components, such as the turbine and associated electricity generator; large transformers that move the electricity from the reactor out to the grid; equipment used to cool the reactor during operation; and systems for controlling the plant during startup, shutdown and power generation.

As an analogy, imagine that you move to a city and stop driving your car for five years. When you decide to resume driving, you’d need to ensure you have gas, that your driver’s license is still valid and that all of the car’s components still operate correctly. It would probably need new oil, air in the tires, new filters and other replacement parts to run well.

A nuclear plant is much more complicated than a car, so the number of checks and verifications will take longer and cost more. Constellation expects to bring the restored plant online in 2028 at a projected cost of US$1.6 billion.

What will the NRC consider as it decides whether to relicense the reactor?

The agency needs to independently confirm Constellation has enough fuel and trained personnel, and that the plant can run safely. These checks must be approved by the commission before the plant can operate.

In my view, Constellation will need to show that the plant is in a condition to operate at the same levels of safety that existed there in September 2019 when the company terminated operations.

Do you expect other utilities to try this type of restoration at closed reactors?

Constellation is not the only utility considering restarting a nuclear plant. Holtec International, an energy technology company, bought the closed Palisades nuclear plant in southwest Michigan in 2022 with the intent to decommission it, but then the company decided to restore and reopen the plant.

That work is underway now. Recently, in its first major inspection at the plant, the NRC found a number of components that it said required more testing and repair work.

Wolverine Power Cooperative, a not-for-profit energy provider to rural communities across Michigan, plans to purchase electricity from the restored Palisades plant, with support from the U.S. Department of Agriculture’s Empowering Rural America program. Holtec is receiving support for restoring Palisades from the U.S. Department of Energy and the state of Michigan.

A third company, NextEra Energy, is considering restarting its Duane Arnold nuclear plant in Palo, Iowa. And others could follow. In the past decade, a dozen nuclear plants closed before the end of their licensed operating lives because they were having trouble competing economically. But with electricity demand rising, especially to power data centers and electric vehicles, some of those plants could also become candidates for reopening.The Conversation

About the Author:

Todd Allen, Professor of Nuclear Engineering & Radiological Sciences, University of Michigan

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

 

Energy Opinions
27 Sep

Week Ahead: All that glitters isn’t always gold…

By ForexTime 

  • Silver ↑ 33% since start of 2024
  • 83% correlation with gold over past 5 years
  • Supported by Fed cut & industrial demand
  • Over past year US NFP triggered moves of ↑ 2.2% & ↓ 2.6%
  • Bloomberg FX model – 70% – ($30.14 – $33.41)

The week ahead is stacked with key data and speeches by numerous policymakers!

But all eyes will be on the incoming US jobs report which could rock silver prices.

Monday, 30th September

  • CN50: China Official & Caixin PMIs
  • EU50: Germany CPI, ECB President Christine Lagarde speech
  • JP225: Japan industrial production, retail sales
  • ZAR: South Africa trade balance
  • UK100: UK Q2 GDP (final)
  • USDInd: Fed Chair Jerome speech

Tuesday, 1st October  

  • EU50: Eurozone Manufacturing PMI, CPI, Germany Manufacturing PMI
  • JP225: Japan unemployment, Tankan index, Manufacturing PMI
  • UK100: S&P Global Manufacturing PMI
  • US500: US job openings, ISM Manufacturing
  • USDInd: Speeches by Atlanta Fed President Raphael Bostic, Fed Governor Lisa Cook, Richmond Fed President Thomas Barkin and Boston Fed President Susan Collins
  • US30: Nike earnings

Wednesday, 2nd October

  • EU50: Eurozone unemployment
  • US500: Speeches by Richmond’s Thomas Barkin, Cleveland’s Beth Hammack, St. Louis’s Alberto Musalem and Fed Governor Michelle Bowman.
  • UK100: BoE meeting minutes

Thursday, 3rd October

  • AU200: Australia trade
  • EU50: Eurozone Services PMI, PPI
  • USDInd: US ISM services, initial jobless claims,
  • RUS200 index: Speeches by Minneapolis Fed President Neel Kashkari, Atlanta Fed President Raphael Bostic.

Friday, 4th October

  • SG20: Singapore retail sales
  • XAGUSD: US September jobs report

Why cover silver when gold recently touched another all-time high?

Well, the white metal has been trending higher –  touching its highest level since 2012.

silver

It has also outperformed gold on a week-to-date (wtd), month-to-date (mtd) and year-to-date (ytd) basis:

  • XAGUSD: ↑ 1.9% wtd / 10% mtd / 33% ytd
  • XAUUSD: ↑ 1.6% wtd / 6% mtd / 29% ytd

Investor appetite for precious metals jumped after the Federal Reserve cut interest rates for the first time in 4 years.

But silver is also drawing strength from the possibility of increased industrial use after China unleashed a wave of stimulus to revive its economy.

These fundamental forces point to further gains for silver which has moved in tandem with gold 83% of the time in any given 5-day period over the past 5 years.

Still, the incoming NFP report could shape the white metal’s outlook for October.

What are the market forecasts for the September NFP report?

  • 140,000 jobs added in September (lower than the 142,000 added in August)
  • Unemployment rate to remain unchanged at 4.2%
  • Average hourly earnings to slip to 0.3% month-on-month (0.4% in August)
  • Average hourly earnings to slip 3.7% year-on-year (3.8% in August)

Traders are currently pricing in a 49% probability of a 50 bp Fed cut by November with a 90% probability that 75 bp worth of cuts will be achieved by the end of 2024.

  • Silver prices could push higher if a soft NFP report weakens the dollar and supports the case for deeper US rate cuts in Q4.
  • A stronger-than-expected jobs report could weaken silver, especially if this results in a stronger dollar and reduced expectations over lower US rates.

It will be wise to keep a close eye on speeches by numerous Fed officials which may provide insight into future Fed moves – resulting in potential volatility for precious metals including silver.

Golden nugget: Over the past year, the US jobs report has triggered upside moves of as much as 2.2% or declines of 2.6% in a 6-hour window post-release.

 

Technical outlook:

Silver is trending higher on the daily charts with prices above the 50, 100 and 200-day SMA. However, the Relative Strength Index (RSI) is close to 70 – indicating that prices are near overbought territory.

  • A solid breakout above $32.70 may open doors to the next level of interest at $34.00.
  • Sustained weakness below $32.70 may encourage a decline toward $31.20 and $29.60 – where the 100-day SMA resides.

silver 2

According to Bloomberg’s FX forecast model, there’s a 70% chance that XAGUSD will trade within the $30.14 – $33.41 range over the next one week.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Metals Opinions
26 Sep

Bitcoin: Tests 200-day SMA ahead of Powell & US data

By ForexTime 

  • Bitcoin ↑ 6% since Fed cut last week
  • Fundamental spark could trigger price swings
  • Powell’s pre-recorded speech & US data in focus
  • Tough resistance at 200-day SMA
  • Technical levels – $68,250, $64,000 & $60,000

Bitcoin has struggled for direction since the Federal Reserve announced its 50-basis point rate cut last week.

Despite rising roughly 6% post-Fed decision, bulls failed to conquer the 200-day SMA at $64,000.

Note: Lower US interest rates may boost appetite for riskier assets such as cryptocurrencies.

Looking at the daily charts, prices seem to be trending higher but the Relative Strength Index (RSI) is near overbought territory – signalling a potential throwback.

bITCOIN1

Still, the world’s largest cryptocurrency could experience big price swings with the right fundamental drivers. This may come in the form of a pre-recorded speech by Powell and key US data including the jobless claims in addition to the personal consumption expenditure gauge.

The biggest takeaways from the Fed decision last week were:

  • Dot plot projections showed two more 25 bp cuts expected.
  • Future rate cuts would be data-dependent.
  • Markets currently expect 75 bp of cuts by the end of 2024.

So, investors are likely to closely scrutinize Powell’s pre-recorded speech and US data for additional clues on the Fed’s next move in Q4.

Traders are currently pricing in a 60% probability of a 50 bp Fed cut by November with 75 bp worth of cuts priced in by the end of 2024.

Taking a deeper dive, the initial jobless claims is expected to rise 223k in the week ended September 21st. A figure that exceeds market forecasts could fuel fears over the health of the US labour market – supporting the argument for deeper rate cuts.

 

Golden nugget: Over the past 12 months, the initial jobless claims have triggered upside moves as much as 1.5% or declines of 2% in a 6-hour window post- release.

 

Note: It will be worth keeping an eye on the second quarter GDP data (final print) which is expected to confirm that the US economy expanded 3%.

On Friday, Fed speeches and the US August PCE report will be in focus. Ultimately, further signs of cooling price pressures may reinforce bets around the Fed cutting rates by 75 bp by the end of 2024.

 

Golden nugget: Over the past 12 months, the PCE report has triggered upside moves as much as 0.7% or declines of 2% in a 6-hour window post- release.

Looking at the technical picture…

Bitcoin is on breakout watch with prices lingering around the 200-day SMA.

  • A solid breakout and daily close above $64,000 may open a path toward $68,250.
  • Should $64,000 prove to be reliable resistance, this could trigger a selloff back towards the 100-day at $61,000 and $60,000 – where the 50-day SMA resides.

bITCOIN2

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Cryptocurrencies Opinions
25 Sep

Is Gold Ready To Outshine Stocks?

Source: John Newell (9/24/24)

John Newell of John Newell & Associates explains how you can decode the Dow Gold ratio to understand better which asset, stock, or gold is outperforming the other.

The Dow Gold ratio is one of the most insightful tools for understanding the relationship between stock markets and gold, particularly in times of financial upheaval.

By comparing the price of the Dow Jones Industrial Average to the price of gold, this ratio helps investors gauge which asset, stock, or gold (which has historically been considered money) is outperforming the other.

Today, the ratio is calculated by dividing the Dow at ~42,000 by the gold price at ~ $2,600, equating to approximately 16.15 ounces of gold to buy one Dow share.

A high ratio indicates that stocks are expensive relative to gold, while a low ratio suggests that gold is more highly valued compared to stocks. Throughout history, this ratio has fluctuated dramatically, marking pivotal moments in the global financial landscape.

Key Moments in the Dow Gold Ratio

1971: 25:1

  • At the beginning of 1971, it took roughly 25 ounces of gold to purchase a single share of the Dow. This was a period when stocks had outpaced the performance of gold for years, reflecting a broad belief in the strength of financial markets and economic growth. However, the U.S. was on the verge of significant changes in monetary policy.

1974: 3:1

  • Just a few years later, by 1974, the ratio plummeted to 3 ounces of gold for each Dow share. The rapid devaluation of stocks relative to gold occurred as inflation surged and economic uncertainty took hold, particularly after the U.S. abandoned the gold standard in 1971. Investors flocked to gold as a hedge against inflation, causing gold’s value to soar.

Late 1970s: 10:1

  • Following this sharp decline, the Dow Gold ratio staged a partial recovery, rallying to 10:1 in the late 1970s. However, inflationary pressures and economic instability persisted, preventing a full recovery and keeping gold as a preferred asset for wealth preservation.

1980: 1:1

  • By 1980, the ratio dropped to its lowest point in history — 1:1. This meant that one ounce of gold could buy one Dow share. This dramatic shift came at the peak of economic uncertainty, runaway inflation, and soaring interest rates. Gold had become the ultimate safe haven, while stocks were seen as highly volatile and risky.

2000: ~45:1

  • The long bull market in stocks that began in the 1980s pushed the Dow Gold ratio to an astonishing 45:1 by the year 2000. This period was marked by technological innovation, economic growth, and low inflation, driving stocks to outperform gold significantly. Gold was out of favor, seen as a relic in a time of booming stock markets and rapid technological advancements.

2011: 6:1

  • After the financial crisis of 2008, gold surged once again as investors sought safety amidst economic turmoil. By 2011, the ratio had corrected back to 6:1, reflecting a significant loss of confidence in the global financial system, while gold regained its stature as a store of value.

Today: ~16:1

  • Currently, the Dow Gold ratio sits at approximately 16:1. The market has rebounded significantly since the lows of 2011, but we believe that these markets could be entering another period where gold starts to outpace stocks.

What’s Next? Could We See a Return to 6:1 or Even 1:1?

As the saying goes, “History doesn’t repeat, but it often rhymes.”

Looking at past cycles, it’s clear that the Dow Gold ratio tends to revert toward certain key levels during times of economic stress and uncertainty. If “past is prologue,” the charts suggest that we may be heading back toward a 6:1 ratio and possibly even another ~ 1:1 scenario, as we saw in 1933 and 1980

Several factors support this thesis:

  1. Global Inflation and Monetary Policy: Inflation is again a significant concern for investors, with central banks worldwide continuing to grapple with rising prices. Historically, periods of high inflation have favored gold over stocks as investors seek to preserve their purchasing power.
  2. Geopolitical Instability: The ongoing geopolitical tensions, trade wars, and economic uncertainty are causing shifts in global financial markets. Gold traditionally performs well in these environments, as it is seen as a safe-haven asset.
  3. Debasement of Fiat Currencies: With massive debt levels and aggressive monetary stimulus measures, fiat currencies are losing value relative to hard assets like gold. As more central banks move toward looser monetary policies, gold’s relative strength is likely to increase, pushing the Dow Gold ratio lower.
  4. Investor Sentiment: While stocks have performed well over the last decade, there are growing concerns about valuations, especially in tech-heavy indices like the Dow. A correction or a prolonged period of stagnation in stock markets could further tilt the ratio in gold’s favor.

The Big Picture Dow / Gold Ratio Chart

Conclusion: The Dow Gold Ratio and the Case for Gold

The Dow Gold ratio has been a reliable barometer of market sentiment and economic conditions for decades. It tells a story of booms, busts, and the cyclical nature of markets.

If history is any indication, we may be on the cusp of another significant move in favor of gold. The current ratio of 16:1 is far from the extremes we’ve seen in the past, and we believe that a return to 6:1 is possible in the near future.

In more extreme cases, we could even see a return to the historic 1:1 ratio, as the chart shows is possible, because it happened before in 1933 and 1980.

For investors seeking protection against economic uncertainty and inflation, the Dow Gold ratio offers a compelling case for gold as a valuable part of any diversified portfolio.

 

Important Disclosures:

  1. Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found  below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
  2. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

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John Newell Disclaimer

As always it is important to note that investing in precious metals like silver carries risks, and market conditions can change violently with shock and awe tactics, that we have seen over the past 20 years. Before making any investment decisions, it’s advisable consult with a financial advisor if needed. Also the practice of conducting thorough research and to consider your investment goals and risk tolerance.

Metals Opinions
23 Sep

Immigrants are unsung heroes of global trade and value creation

By Bedassa Tadesse, University of Minnesota Duluth and Roger White, Whittier College 

In nearly every country that hosts foreign-born citizens, immigration emerges as a lightning rod for controversy. The economic realities of immigration, however, are far more complex than the negative sound bites suggest.

Far from being a burden, as critics claim, immigrants play pivotal roles in driving innovation, enhancing productivity and fostering economic growth in their adopted countries. They also elevate their adopted and origin countries’ standings in global value chains, contributing to economic resilience.

We are economists who study global trade and migration, and our recent work reveals that immigrants contribute far more to the economic fabric of nations than previously understood.

By facilitating what’s known as “trade in value added,” or TiVA, immigrants play a crucial role in helping countries specialize their production, move up the value chain and significantly enhance trade sophistication.

Moving up the value chain means progressing from producing basic, low-value goods to more complex, higher-value products. This shift involves improving skills, technology and production techniques, allowing a country to capture more economic value and develop advanced industries.

So, what exactly is trade in value added, and why is it important?

In today’s global economy, products are rarely made entirely in one country. Instead, different stages of production occur across multiple nations. TiVA measures each country’s contribution to a final product, providing clearer insight into global value chains. For instance, while an iPhone may be assembled in China, its components come from various countries, each adding value.

Measuring the effect on global value chains

Our study found that a 10% increase in immigrants from a particular country residing in one of the 38 Organization for Economic Cooperation and Development member states leads to a 2.08% increase in the value added from their home country that becomes embedded in their host country’s exports to the world.

This effect was strongest in the services sector, followed closely by agriculture and manufacturing.

To understand how this works, consider Indian software engineers in Silicon Valley. Their understanding of the U.S. tech industry and India’s IT sector can lead to partnerships. These partnerships lead to Indian firms providing specialized coding services for American tech giants. The result? Higher-value U.S. tech exports that incorporate Indian expertise. This perfectly illustrates how immigrants boost trade in value added.

Or take Chinese immigrants in Italy’s fashion industry. Their cultural knowledge might help Italian luxury brands tailor products for the Chinese market and connect Italian designers with highly skilled textile workers in China. The result? Italian fashion exports incorporate Chinese craftsmanship, elevating both countries’ global fashion value chain positions.

Our findings show that immigrants are pivotal bridges in global trade networks. They leverage their unique knowledge, skills and connections to strengthen economic bonds between nations. That’s in line with previous research showing the significant role immigrants play in fostering bilateral trade.

Why immigration matters in the global economy

In an era of increasing skepticism toward globalization and migration, understanding the positive economic impacts of immigration is crucial. Our current and previous research, and the findings from related studies, indicate that rather than “stealing jobs,” immigrants often create value and new economic opportunities that might not otherwise exist.

Immigrants bring diverse skills, knowledge and networks to their host countries that can enhance innovation, fill labor shortages and open new market opportunities. They often possess unique insights into their home country markets, helping host country firms navigate cultural nuances and business practices that might otherwise pose trade barriers.

For home countries, emigrants can serve as cultural ambassadors, creating awareness, showcasing products and services, and helping to integrate their homeland into global value chains. They may also contribute to knowledge transfer, investment flows and business connections that boost their home and host countries’ economic development.

Moreover, immigrants’ ability to enhance trade in value added suggests they play a role in moving countries up the economic value chain. Rather than simply facilitating trade in raw materials or essential manufactured goods, immigrants appear to boost trade in more sophisticated, higher-value products and services. This is crucial for economic development, as countries that position themselves higher in global value chains tend to see bigger benefits.

Rethinking immigration and trade policies

Our observations have important implications for both immigration and trade. For one, they suggest that restrictive immigration policies might have unintended consequences, hindering a country’s trade performance and position in global value chains. Countries that want to become more economically competitive might consider more open immigration policies.

What’s more, our research indicates that immigrants’ economic benefits extend beyond the often-cited labor-market and fiscal impacts – in other words, having more workers who pay more taxes.

The evidence suggests policymakers should take a more holistic view of immigration’s economic effects, considering its role in facilitating sophisticated international trade and value creation.

Our results also align with previous research highlighting the potential value of workforce diversity for businesses, particularly for firms engaged in international trade. Employees from diverse national backgrounds can bring valuable insights and connections that help their companies navigate global markets and value chains.

It’s worth noting that immigrants’ impact on trade in value added varies across countries and sectors. This suggests that rather than one-size-fits-all approaches, targeted policies might most effectively leverage immigration for economic benefit.

Maximizing immigration’s positive impacts on trade and value chains also requires supportive policies and institutions that allow immigrants to use their skills and networks fully. These might include programs to assist with economic integration, language training, credential recognition and support for immigrant entrepreneurship.

A new perspective on immigration

As the global economy continues to evolve, with value chains becoming ever more complex and interconnected, the role of immigrants as facilitators of trade and value creation is likely to grow even more significant. Countries that recognize and leverage this potential stand to gain a competitive edge in the global marketplace.

Our research paints a picture of immigrants not as economic burdens but as valuable assets who enhance their host and home countries’ positions in the global economy. By making sophisticated trade linkages possible, and by boosting participation in global value chains, immigrants contribute to economic growth and development in ways that go far beyond conventional understanding.

As debates around immigration continue, it’s crucial to move beyond simplistic narratives and recognize the complex and often subtle ways that immigrants contribute to prosperity. In an interconnected world, immigrants aren’t just crossing borders – they are helping to weave the fabric of global trade and value creation.The Conversation

About the Author:

Bedassa Tadesse, Professor of Economics, University of Minnesota Duluth and Roger White, Professor of Economics, Whittier College

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

 

Economics & Fundamentals Opinions
22 Sep

Currency Speculators pared back bets before Fed Interest Rate Reduction

By InvestMacro

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 September 17th 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 Bets led by the Swiss Franc & New Zealand Dollar

The COT currency market speculator bets were lower this week as just three out of the eleven currency markets we cover had higher positioning while the other eight markets had lower speculator contracts.

Leading the gains for the currency markets was the Swiss Franc (4,196 contracts) with the New Zealand Dollar (1,425 contracts) and the Japanese Yen (1,070 contracts) also recording positive weeks.

The currencies seeing declines in speculator bets on the week were the British Pound (-27,309 contracts), the Australian Dollar (-26,080 contracts), the Mexican Peso (-19,303 contracts), the US Dollar Index (-18,412 contracts), the EuroFX (-11,787 contracts), the Canadian Dollar (-4,197 contracts), the Brazilian Real (-1,942 contracts) and Bitcoin (-620 contracts) also registering lower bets on the week.

Currency Speculators pared back bets before Fed Interest Rate Reduction

Highlighting the COT data for the week was the sharp pullback in positions for most of the major currencies. The COT data is updated through Tuesday, September 17th which was one day before the Federal Reserve decreased the US interest rate by 50 basis points. The uncertainty of the Fed meeting outcome spurred speculators to reduce their positions and this can be seen by the strong decline in the open interest levels this week. Open interest measures the amount of open positions in the market and a fall in open interest means those positions were closed out or found an offsetting buyer or seller. Many of the major currencies experienced the largest open interest decreases of the year on Tuesday.

Weekly Forex Roundup:

The US dollar index saw the fourth highest weekly decline in speculator bets on record this week with a shortfall by -18,412 contracts. This broke a three-week streak of rising bullish positions and drops the overall bullish level back to just +1,798 contracts – the lowest level since May. The dollar index exchange rate is hovering around the significant level of 100.00 with this week’s close at 100.74 and has decreased in seven out of the past eight weeks.

The Australian dollar speculators dropped their bets by over -26,000 contracts this week to bring the total spec standing to -40,122 contracts. The AUD speculator standing remains bearish but has come off the lows of earlier in the year. The AUD positioning had fallen to a record bearish level in March at a total of -107,538 contracts before turning around. The AUD exchange rate has been bouncing around in a range approximately between 0.60 and 0.70 for the past few years and is currently near the top of that range at 0.6807 this week.

The British pound sterling bets dropped by -27,309 contracts this week following a decline by -17,790 contracts last week. The overall position remains bullish with a total standing of +62,979 contracts this week. The GBP positioning has had a strong bullish tilt this year and hit an all-time record high position in July at a total of +142,183 contracts. The GBP exchange versus the USD has been on the rise as well with the GBP hitting the highest level since 2022 with a close at 1.3322 this week. The GBP is now up over 25 percent from the low-point reached in September of 2022.

The Mexican peso positioning fell sharply this week by over -18,000 contracts. The peso speculator positions have been deteriorating sharply since June and have now fallen for eleven straight weeks through Tuesday. From March 5th to June 11th, the peso spec standing had been over +100,000 contracts in each of those fifteen weeks. Since then, peso bets have declined and now stand at just +7,723 contracts which is the lowest level since March 7th of 2023, a span of eighty weeks. The peso exchange rate has been on the downtrend since hitting an almost decade high in April of this year. The peso has fallen by approximately fifteen percent since the April high and has declined for four out of the past five weeks.

Currencies Net Speculators Leaderboard

Legend: Weekly Speculators Change | Speculators Current Net Position | Speculators Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by the Japanese Yen

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 Japanese Yen (100 percent) led the currency markets this week. The Swiss Franc (66 percent), the British Pound (64 percent), Australian Dollar (57 percent) and the Canadian Dollar (55 percent) came in as the next highest in the weekly strength scores.

On the downside, the US Dollar Index (8 percent) came in at the lowest strength levels currently and is in Extreme-Bearish territory (below 20 percent). The next lowest strength scores are the Brazilian Real (21 percent), the Mexican Peso (35 percent) and the New Zealand Dollar (37 percent).

Strength Statistics:
US Dollar Index (7.9 percent) vs US Dollar Index previous week (47.1 percent)
EuroFX (50.0 percent) vs EuroFX previous week (55.0 percent)
British Pound Sterling (64.4 percent) vs British Pound Sterling previous week (76.7 percent)
Japanese Yen (100.0 percent) vs Japanese Yen previous week (99.6 percent)
Swiss Franc (66.2 percent) vs Swiss Franc previous week (57.7 percent)
Canadian Dollar (55.2 percent) vs Canadian Dollar previous week (57.1 percent)
Australian Dollar (56.8 percent) vs Australian Dollar previous week (78.8 percent)
New Zealand Dollar (37.3 percent) vs New Zealand Dollar previous week (34.5 percent)
Mexican Peso (35.3 percent) vs Mexican Peso previous week (44.7 percent)
Brazilian Real (21.4 percent) vs Brazilian Real previous week (23.3 percent)
Bitcoin (51.8 percent) vs Bitcoin previous week (61.1 percent)

Canadian Dollar & New Zealand Dollar top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the Canadian Dollar (49 percent) and the New Zealand Dollar (29 percent) lead the past six weeks trends for the currencies. The Japanese Yen (28 percent), the Brazilian Real (21 percent) and the EuroFX (15 percent) are the next highest positive movers in the latest trends data.

The US Dollar Index (-31 percent) leads the downside trend scores currently with the Mexican Peso (-28 percent), Bitcoin (-23 percent) and the British Pound (-5 percent) following next with lower trend scores.

Strength Trend Statistics:
US Dollar Index (-30.6 percent) vs US Dollar Index previous week (6.9 percent)
EuroFX (15.4 percent) vs EuroFX previous week (27.1 percent)
British Pound Sterling (-5.1 percent) vs British Pound Sterling previous week (-9.5 percent)
Japanese Yen (28.3 percent) vs Japanese Yen previous week (53.6 percent)
Swiss Franc (10.1 percent) vs Swiss Franc previous week (26.8 percent)
Canadian Dollar (48.6 percent) vs Canadian Dollar previous week (57.1 percent)
Australian Dollar (0.1 percent) vs Australian Dollar previous week (14.6 percent)
New Zealand Dollar (28.6 percent) vs New Zealand Dollar previous week (15.6 percent)
Mexican Peso (-28.3 percent) vs Mexican Peso previous week (-19.9 percent)
Brazilian Real (21.4 percent) vs Brazilian Real previous week (10.2 percent)
Bitcoin (-22.7 percent) vs Bitcoin previous week (9.8 percent)

Individual COT Forex Markets:

US Dollar Index Futures:

US Dollar Index Forex Futures COT ChartThe US Dollar Index large speculator standing this week came in at a net position of 1,798 contracts in the data reported through Tuesday. This was a weekly fall of -18,412 contracts from the previous week which had a total of 20,210 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 7.9 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 3.5 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

US DOLLAR INDEX StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:64.222.07.8
– Percent of Open Interest Shorts:56.921.615.4
– Net Position:1,79883-1,881
– Gross Longs:15,8975,4381,935
– Gross Shorts:14,0995,3553,816
– Long to Short Ratio:1.1 to 11.0 to 10.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):7.9100.03.5
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-30.633.3-15.9

 

Euro Currency Futures:

Euro Currency Futures COT ChartThe Euro Currency large speculator standing this week came in at a net position of 69,646 contracts in the data reported through Tuesday. This was a weekly fall of -11,787 contracts from the previous week which had a total of 81,433 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 50.0 percent. The commercials are Bearish with a score of 46.4 percent and the small traders (not shown in chart) are Bullish with a score of 72.0 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

EURO Currency StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:26.957.012.8
– Percent of Open Interest Shorts:16.673.96.2
– Net Position:69,646-114,40244,756
– Gross Longs:182,281386,39686,454
– Gross Shorts:112,635500,79841,698
– Long to Short Ratio:1.6 to 10.8 to 12.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):50.046.472.0
– Strength Index Reading (3 Year Range):BearishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:15.4-21.246.7

 

British Pound Sterling Futures:

British Pound Sterling Futures COT ChartThe British Pound Sterling large speculator standing this week came in at a net position of 62,979 contracts in the data reported through Tuesday. This was a weekly lowering of -27,309 contracts from the previous week which had a total of 90,288 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 64.4 percent. The commercials are Bearish with a score of 29.7 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 97.4 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

BRITISH POUND StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:58.722.417.8
– Percent of Open Interest Shorts:29.159.99.9
– Net Position:62,979-79,75116,772
– Gross Longs:124,82247,64537,880
– Gross Shorts:61,843127,39621,108
– Long to Short Ratio:2.0 to 10.4 to 11.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):64.429.797.4
– Strength Index Reading (3 Year Range):BullishBearishBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-5.10.521.2

 

Japanese Yen Futures:

Japanese Yen Forex Futures COT ChartThe Japanese Yen large speculator standing this week came in at a net position of 56,840 contracts in the data reported through Tuesday. This was a weekly advance of 1,070 contracts from the previous week which had a total of 55,770 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 100.0 percent. The commercials are Bearish-Extreme with a score of 0.0 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 100.0 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

JAPANESE YEN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:48.828.521.3
– Percent of Open Interest Shorts:20.364.613.8
– Net Position:56,840-71,83914,999
– Gross Longs:97,33256,91542,545
– Gross Shorts:40,492128,75427,546
– Long to Short Ratio:2.4 to 10.4 to 11.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):100.00.0100.0
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:28.3-31.538.3

 

Swiss Franc Futures:

Swiss Franc Forex Futures COT ChartThe Swiss Franc large speculator standing this week came in at a net position of -17,108 contracts in the data reported through Tuesday. This was a weekly rise of 4,196 contracts from the previous week which had a total of -21,304 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 66.2 percent. The commercials are Bearish with a score of 28.4 percent and the small traders (not shown in chart) are Bullish with a score of 74.4 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

SWISS FRANC StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:14.759.724.6
– Percent of Open Interest Shorts:43.929.525.6
– Net Position:-17,10817,728-620
– Gross Longs:8,57934,98214,395
– Gross Shorts:25,68717,25415,015
– Long to Short Ratio:0.3 to 12.0 to 11.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):66.228.474.4
– Strength Index Reading (3 Year Range):BullishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:10.1-18.629.3

 

Canadian Dollar Futures:

Canadian Dollar Forex Futures COT ChartThe Canadian Dollar large speculator standing this week came in at a net position of -73,150 contracts in the data reported through Tuesday. This was a weekly decline of -4,197 contracts from the previous week which had a total of -68,953 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 55.2 percent. The commercials are Bearish with a score of 44.2 percent and the small traders (not shown in chart) are Bearish with a score of 45.8 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

CANADIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:8.477.112.6
– Percent of Open Interest Shorts:36.950.610.6
– Net Position:-73,15068,0615,089
– Gross Longs:21,464197,83832,218
– Gross Shorts:94,614129,77727,129
– Long to Short Ratio:0.2 to 11.5 to 11.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):55.244.245.8
– Strength Index Reading (3 Year Range):BullishBearishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:48.6-48.326.2

 

Australian Dollar Futures:

Australian Dollar Forex Futures COT ChartThe Australian Dollar large speculator standing this week came in at a net position of -40,122 contracts in the data reported through Tuesday. This was a weekly fall of -26,080 contracts from the previous week which had a total of -14,042 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 56.8 percent. The commercials are Bearish with a score of 41.2 percent and the small traders (not shown in chart) are Bullish with a score of 76.2 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

AUSTRALIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:31.850.116.2
– Percent of Open Interest Shorts:55.431.311.4
– Net Position:-40,12231,9788,144
– Gross Longs:53,94185,06927,547
– Gross Shorts:94,06353,09119,403
– Long to Short Ratio:0.6 to 11.6 to 11.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):56.841.276.2
– Strength Index Reading (3 Year Range):BullishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:0.1-8.835.0

 

New Zealand Dollar Futures:

New Zealand Dollar Forex Futures COT ChartThe New Zealand Dollar large speculator standing this week came in at a net position of -1,890 contracts in the data reported through Tuesday. This was a weekly rise of 1,425 contracts from the previous week which had a total of -3,315 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 37.3 percent. The commercials are Bullish with a score of 55.1 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. The current action for the model is considered to be: Hold – Maintain Long Position.

NEW ZEALAND DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:42.146.311.3
– Percent of Open Interest Shorts:45.946.87.0
– Net Position:-1,890-2622,152
– Gross Longs:20,75822,8135,579
– Gross Shorts:22,64823,0753,427
– Long to Short Ratio:0.9 to 11.0 to 11.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):37.355.180.8
– Strength Index Reading (3 Year Range):BearishBullishBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:28.6-35.557.7

 

Mexican Peso Futures:

Mexican Peso Futures COT ChartThe Mexican Peso large speculator standing this week came in at a net position of 7,723 contracts in the data reported through Tuesday. This was a weekly lowering of -19,303 contracts from the previous week which had a total of 27,026 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 35.3 percent. The commercials are Bullish with a score of 65.9 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 8.6 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

MEXICAN PESO StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:37.157.43.3
– Percent of Open Interest Shorts:31.262.24.4
– Net Position:7,723-6,352-1,371
– Gross Longs:48,48674,9414,349
– Gross Shorts:40,76381,2935,720
– Long to Short Ratio:1.2 to 10.9 to 10.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):35.365.98.6
– Strength Index Reading (3 Year Range):BearishBullishBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-28.327.5-0.3

 

Brazilian Real Futures:

Brazil Real Futures COT ChartThe Brazilian Real large speculator standing this week came in at a net position of -32,306 contracts in the data reported through Tuesday. This was a weekly decline of -1,942 contracts from the previous week which had a total of -30,364 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 21.4 percent. The commercials are Bullish with a score of 79.5 percent and the small traders (not shown in chart) are Bearish with a score of 20.8 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

BRAZIL REAL StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:23.969.14.0
– Percent of Open Interest Shorts:72.320.64.0
– Net Position:-32,30632,321-15
– Gross Longs:15,91346,0772,665
– Gross Shorts:48,21913,7562,680
– Long to Short Ratio:0.3 to 13.3 to 11.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):21.479.520.8
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:21.4-20.4-4.3

 

Bitcoin Futures:

Bitcoin Crypto Futures COT ChartThe Bitcoin large speculator standing this week came in at a net position of -973 contracts in the data reported through Tuesday. This was a weekly decline of -620 contracts from the previous week which had a total of -353 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 51.8 percent. The commercials are Bullish with a score of 79.9 percent and the small traders (not shown in chart) are Bearish with a score of 21.5 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

BITCOIN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:77.05.04.0
– Percent of Open Interest Shorts:80.13.12.8
– Net Position:-973596377
– Gross Longs:23,8661,5441,238
– Gross Shorts:24,839948861
– Long to Short Ratio:1.0 to 11.6 to 11.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):51.879.921.5
– Strength Index Reading (3 Year Range):BullishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-22.733.54.5

 

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
21 Sep

Speculator Extremes: Gold, Yen, Fed Funds & VIX lead weekly Bullish 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 September 17th.

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)

Here Are This Week’s Most Bullish Speculator Positions:

Gold


The Gold speculator position comes in as the most bullish extreme standing this week. The Gold speculator level is currently at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 27.6 this week. The overall net speculator position was a total of 310,066 net contracts this week with a gain of 27,565 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.

Japanese Yen


The Japanese Yen speculator position comes next in the extreme standings this week. The Japanese Yen speculator level is now at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score was 28.3 this week. The speculator position registered 56,840 net contracts this week with a weekly rise of 1,070 contracts in speculator bets.

Fed Funds


The Fed Funds speculator position comes in third this week in the extreme standings. The Fed Funds speculator level resides at a 100.0 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 54.7 this week. The overall speculator position was 178,807 net contracts this week with a surge of 235,228 contracts in the weekly speculator bets.

VIX


The VIX speculator position comes up number four in the extreme standings this week. The VIX speculator level is at a 100.0 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 37.1 this week. The overall speculator position was -6,513 net contracts this week with an increase by 8,598 contracts in the speculator bets.

Silver


The Silver speculator position rounds out the top five in this week’s bullish extreme standings. The Silver speculator level sits at a 96.3 percent score of its 3-year range. The six-week trend for the speculator strength score was 12.5 this week.

The speculator position was 58,298 net contracts this week with a gain of 13,556 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

10-Year Note


The 10-Year Note speculator position comes in as the most bearish extreme standing this week. The 10-Year Note speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -24.9 this week. The overall speculator position was -1,094,026 net contracts this week with a drop of -71,921 contracts in the speculator bets.

Heating Oil


The Heating Oil speculator position comes in next for the most bearish extreme standing on the week. The Heating Oil speculator level is at a 0.8 percent score of its 3-year range.

The six-week trend for the speculator strength score was -39.3 this week. The speculator position was -13,385 net contracts this week with a decline of -6,424 contracts in the weekly speculator bets.

WTI Crude Oil


The WTI Crude Oil speculator position comes in as third most bearish extreme standing of the week. The WTI Crude Oil speculator level resides at a 2.4 percent score of its 3-year range.

The six-week trend for the speculator strength score was -26.4 this week. The overall speculator position was 145,328 net contracts this week with a rise of 5,314 contracts in the speculator bets.

Gasoline


The Gasoline speculator position comes in as this week’s fourth most bearish extreme standing. The Gasoline speculator level is at a 7.2 percent score of its 3-year range.

The six-week trend for the speculator strength score was 7.2 this week. The speculator position was 16,749 net contracts this week with an increase of 1,112 contracts in the weekly speculator bets.

US Dollar Index


Finally, the US Dollar Index speculator position comes in as the fifth most bearish extreme standing for this week. The US Dollar Index speculator level is at a 7.9 percent score of its 3-year range.

The six-week trend for the speculator strength score was -30.6 this week. The speculator position was 1,798 net contracts this week with a drop of -18,412 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
20 Sep

Week Ahead: Can RUS2000 reach highest since 2021?

By ForexTime 

  • RUS2000: FXTM’s best-performing US stock index so far this week/month
  • RUS2000 forecasted to have the most potential upside over the next 12 months
  • Fed speakers, US data next week could help RUS2000 move closer to 2021 all-time high
  • Markets predict 89% chance Fed will cut rates by further 75-basis points by end-2024
  • Return of US recession fears could send RUS2000 plummeting

 

The RUS2000 index has been outshining its US peers of late.

This US stock index tracks the smallest 2000 publicly listed companies operating in the world’s largest economy i.e. companies that are more reflective of true US economic conditions.

Of late, the RUS2000 has been rejoicing the most, relative to FXTM’s other US stock indexes, over the Fed’s jumbo-sized 50 basis point rate cut!

That rate cut on September 18th, 2024 was the first US rate cut in 4 years.

With the Fed coming to the US economy’s aid with its rate cuts, the RUS2000 has outperformed other US stock indexes, both on a week-to-date (wtd) and month-to-date (mtd) basis:

  • RUS2000: up 3.2% wtd / 1.6% mtd
  • US400: up 3% wtd / 1.1% mtd
  • NAS100: up 1.7% wtd / 1.35% mtd
  • US500: up 1.56% wtd / 1.16% mtd
  • US30: up 1.53% wtd / 1.1% mtd

 

But RUS2000 still missing out on record-high club, for now

To be clear, the RUS200 has yet to join the record-high party which already features the likes of US500, US30, US400, and even gold of late.

At the time of writing, the RUS2000 remains about 8.5% below its all-time high, using intraday prices, of 2458.85 registered on November 8th, 2021.

Wall Street experts predict it will eventually set a new record high, but perhaps only by this time next year.

 

Wall Street most bullish on RUS2000 12-month outlook

Here are the forecasted potential gains for these US stock indexes over the next 12 months:

  • RUS2000: 19.4%
  • NAS100: 11.7%
  • US400: 9.9%
  • US500: 9.1%
  • US30: 5.4%

However, such gains are predicated on the notion that the Fed can indeed fend off a US recession.

And much of that will depend on the incoming US economic data, and whether the Fed can overcome their differing views and lower interest rates fast enough to avoid such a scenario.

Otherwise, a US recession is bound to send the RUS2000 plummeting, given the economically-sensitive nature of the stocks within this index.

 

What to look out for in the coming week?

The incoming scheduled speeches by Fed officials, fresh out of their September FOMC meeting, could provide further cause for RUS2000 bulls (those hoping prices will go higher) to rejoice even more:

 

Monday, September 23

  • NZD: New Zealand August trade balance
  • SG20 index: Singapore August CPI
  • TWN index: Taiwan August unemployment
  • EU50 index: Eurozone September PMIs
  • GBP: UK September PMIs
  • USD index: US September PMIs
  • RUS2000 index: Speeches by Chicago Fed President Austan Goolsbee, Atlanta Fed President Raphael Bostic, Minneapolis Fed President Neel Kashkari

 

Tuesday, September 24

  • JP225 index: Japan September PMIs
  • AUD: RBA rate decision
  • TWN index: Taiwan August export orders
  • GER40 index: Germany September business climate
  • Brent/Crude: OPEC releases annual World Oil Outlook
  • US400 index: US September consumer confidence

 

Wednesday, September 25

  • CNH: China medium-term lending facility rate
  • AU200 index: Australia August CPI
  • SEK: Riksbank policy rate decision
  • TWN index: Taiwan August industrial production

 

Thursday, September 26

  • JPY: BoJ meeting minutes
  • SG20 index: Singapore August industrial production
  • CHF: SNB policy rate decision
  • US500 index: US weekly initial jobless claims; US 2Q GDP (final)
  • USD index: Speeches by Fed Chair Jerome Powell (pre-recorded), New York Fed President John Williams, Treasury Secretary Janet Yellen

 

Friday, September 27

  • JPY: Tokyo September CPI; LDP internal elections
  • CN50 index: China August industrial profits
  • EUR: Eurozone September economic confidence; Germany September unemployment
  • US400 index: US August PCE, personal income and spending
  • RUS2000 index: Speeches by Boston Fed President Susan Collins, Fed Governor Adriana Kugler

 

Sure, the coming week also features key US economic data such as the US purchasing managers index (PMIs), consumer confidence, weekly jobless claims, final estimate of 2Q GDP, personal income and spending, as well as the Fed’s preferred inflation gauge – the personal consumption expenditures (PCE).

All of these quantitative data certainly hold the potential to move US stock markets, including the RUS2000 index.

However, markets may instead be more attentive to the forward-looking statements out of Fed officials in the days ahead.

 

Why are the Fed speakers so important?

These scheduled speeches come just days after the Fed’s jumbo rate cut on September 18th.

Note that this latest US rates decision also featured its first dissenting vote from any FOMC member since 2022.

Fed Governor Michelle Bowman voted in favour of a run-of-the-mill 25 basis point cut at the just-concluded September meeting.

A closer look at the FOMC’s famous “dot plot” also suggests that policymakers at the world’s most powerful central bank are at odds regarding the size and timing of future rate cuts:

Fed dot plot

  • 10 of 19 officials prefer another 50-bps in rate cuts by end-2024
  • 7 of the 19 voted for only one sole 25-bps rate cut by year-end
  • 2 of the remaining officials voted for no more rate cuts this year.

 

FOMC “dot plot” at odds with market forecasts

Not only are there differing views amongst FOMC members themselves, those views are also at odds with the market’s current forecasts.

At the time of writing, markets are forecasting a 89% chance that the Fed will lower its benchmark rates by another 75-basis points by Christmas.

Hence, the incoming Fed speak** will be stacked up against the latest Fed dot plot, and also current market forecasts.

**in bold in our coming week’s list of highlighted events (see above).

Notable shifts to existing market forecasts over incoming Fed rate cuts, either by way of signals from the Fed speak or US economic data, are bound to move prices across various asset classes in the week ahead.

In short, if you think the Fed watch is over, think again.

 

POTENTIAL SCENARIOS:

  • If the incoming Fed speak and US economic data assures markets that the Fed can proceed with the forecasted 75 basis points in rate cuts by end-2024, that could help RUS2000 punch its way past 2300 and closer to its November 2021 record high.
  • If the incoming Fed speak and US economic data pushes back on market forecasts for 75 basis points in Fed rate cuts by end-2024, that could drag the RUS2000 stock index back to its 21-day and 50-day simple moving averages (SMA) around 2170 for support.

Russell2000 index yet to join recent record-high club

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19 Sep

Tiny robots and AI algorithms could help to craft material solutions for cleaner environments

By Mahshid Ahmadi, University of Tennessee 

Many human activities release pollutants into the air, water and soil. These harmful chemicals threaten the health of both people and the ecosystem. According to the World Health Organization, air pollution causes an estimated 4.2 million deaths annually.

Scientists are looking into solutions, and one potential avenue is a class of materials called photocatalysts. When triggered by light, these materials undergo chemical reactions that initial studies have shown can break down common toxic pollutants.

I am a materials science and engineering researcher at the University of Tennessee. With the help of robots and artificial intelligence, my colleagues and I are making and testing new photocatalysts with the goal of mitigating air pollution.

Breaking down pollutants

The photocatalysts work by generating charged carriers in the presence of light. These charged carriers are tiny particles that can move around and cause chemical reactions. When they come into contact with water and oxygen in the environment, they produce substances called reactive oxygen species. These highly active reactive oxygen species can bond to parts of the pollutants and then either decompose the pollutants or turn them into harmless – or even useful – products.

A cube-shaped metal machine with a chamber filled with bright light, and a plate of tubes shown going under the light.
To facilitate the photocatalytic reaction, researchers in the Ahmadi lab put plates of perovskite nanocrystals and pollutants under bright light to see whether the reaction breaks down the pollutants.
Astita Dubey

But some materials used in the photocatalytic process have limitations. For example, they can’t start the reaction unless the light has enough energy – infrared rays with lower energy light, or visible light, won’t trigger the reaction.

Another problem is that the charged particles involved in the reaction can recombine too quickly, which means they join back together before finishing the job. In these cases, the pollutants either do not decompose completely or the process takes a long time to accomplish.

Additionally, the surface of these photocatalysts can sometimes change during or after the photocatalytic reaction, which affects how they work and how efficient they are.

To overcome these limitations, scientists on my team are trying to develop new photocatalytic materials that work efficiently to break down pollutants. We also focus on making sure these materials are nontoxic so that our pollution-cleaning materials aren’t causing further pollution.

A plate of tiny tubes, with some colored dark blue, others light blue, and others transparent.
This plate from the Ahmadi lab is used while testing how perovskite nanocrystals and light break down pollutants, like the blue dye shown. The light blue color indicates partial degradation, while transparent water signifies complete degradation.
Astita Dubey

Teeny tiny crystals

Scientists on my team use automated experimentation and artificial intelligence to figure out which photocatalytic materials could be the best candidates to quickly break down pollutants. We’re making and testing materials called hybrid perovskites, which are tiny crystals – they’re about a 10th the thickness of a strand of hair.

These nanocrystals are made of a blend of organic (carbon-based) and inorganic (non-carbon-based) components.

They have a few unique qualities, like their excellent light-absorbing properties, which come from how they’re structured at the atomic level. They’re tiny, but mighty. Optically, they’re amazing too – they interact with light in fascinating ways to generate a large number of tiny charge carriers and trigger photocatalytic reactions.

These materials efficiently transport electrical charges, which allows them to transport light energy and drive the chemical reactions. They’re also used to make solar panels more efficient and in LED lights, which create the vibrant displays you see on TV screens.

There are thousands of potential types of hybrid nanocrystals. So, my team wanted to figure out how to make and test as many as we can quickly, to see which are the best candidates for cleaning up toxic pollutants.

Bringing in robots

Instead of making and testing samples by hand – which takes weeks or months – we’re using smart robots, which can produce and test at least 100 different materials within an hour. These small liquid-handling robots can precisely move, mix and transfer tiny amounts of liquid from one place to another. They’re controlled by a computer that guides their acceleration and accuracy.

A researcher in a white lab coat smiling at the camera next to a fume hood, with plates of small tubes inside it.
The Opentrons pipetting robot helps Astita Dubey, a visiting scientist working with the Ahmadi lab, synthesize materials and treat them with organic pollutants to test whether they can break down the pollutants.
Jordan Marshall

We also use machine learning to guide this process. Machine learning algorithms can analyze test data quickly and then learn from that data for the next set of experiments executed by the robots. These machine learning algorithms can quickly identify patterns and insights in collected data that would normally take much longer for a human eye to catch.

Our approach aims to simplify and better understand complex photocatalytic systems, helping to create new strategies and materials. By using automated experimentation guided by machine learning, we can now make these systems easier to analyze and interpret, overcoming challenges that were difficult with traditional methods.The Conversation

About the Author:

Mahshid Ahmadi, Assistant Professor of Materials Science and Engineering, University of Tennessee

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

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18 Sep

Fed slashes rates by a half-point – what that means for the economy and the presidential election

By Michael Walden, North Carolina State University 

In a widely anticipated move, the Federal Reserve announced on Sept. 18, 2024, that it was cutting its benchmark interest rate by half a percentage point to a range of 4.75% to 5% – the first time the cost of borrowing has been lowered in four years.

The move marks an important pivot point, signaling that central bankers believe they have finally won their battle against inflation. It is also significant in timing, coming just months before the U.S. heads to the polls in a tight election that could turn on how Americans feel the economy is going.

The Conversation U.S. spoke with Mike Walden, distinguished professor emeritus at North Carolina State University, about what the rate cut means for the U.S. economy – and possibly the presidential campaign.

What does the Fed rate cut suggest about the state of the economy?

The Federal Reserve has two mandates: to pin inflation to around its target of 2% and to keep unemployment low. And the central bank balances that twin mandate when looking at whether to raise or lower base rates, or keep them the same.

For some time now, policymakers have concentrated on trying to get inflation under control through a series of interest rate hikes that took the Fed’s benchmark or base rate from a range of 0% to 0.25% in early 2022 to 5.25% to 5.5% in September 2024.

I believe what motivated them to drop the rate by a half-point now – rather than the quarter-point that some were expecting – is the labor market. The labor market is not exactly shaky – unemployment is currently at 4.2% – but it isn’t as robust as it was.

The latest job numbers were a little below expectations. And some economists are saying that there is a recession ahead. Indeed, there are some that are saying the U.S. is already in a recession.

So my guess is the majority of the Fed’s rate-setting board were convinced more by the latest unemployment data than inflation. In terms of the dual mandate, the Fed clearly feels it’s got the inflation fight in the bag, so it has turned to its second concern of keeping unemployment low.

So is this the soft landing the Fed was hoping for?

I would say so, yes. We are now in a soft landing – and I forecast the U.S. economy to slow but avoid a recession.

If I am right, then that is an achievement of Fed policy. A soft landing is very unusual – I can think of only one other occasion when it has occurred since the end of World War II. That was in mid-1995. And the story goes that then-Fed chair Alan Greenspan, during his daily soak in a tub for a bad back, became worried about the prospect of significantly higher prices. He proceeded to convince the Fed board to raise rates, which it did – a move that headed off a potential recession.

What impact will the rate cut have?

The first thing to note is that this will not mean we are returning back to 2019 prices – that would take wage cuts and deflation. This will merely slow inflation, or the rate at which prices rise.

But it will have an impact. In the first hour after the decision was made, stock markets jumped on the news – so investors were clearly happy – though the major indices ended the day lower.

Investment markets tend to anticipate any expected change, so we have already seen some lowering of mortgage rates – which have been trending down in the run-up to the Fed decision. Credit card interest rates have been trending down, too.

So the markets were clearly expecting a Fed rate cut. But we should see further drops in mortgage rates because the Fed has hinted at more interest rate cuts to come.

Is there a danger that some observers will see this as a political move?

I’m sure a lot of people will read this as Fed Chair Jay Powell helping the Democrats by cutting rates before the election.

But this is an economic-driven decision. There is no evidence that this has anything to do with the election.

What does history tell us about rate cuts and elections?

I think most serious observers know that the Fed is independent and makes decisions based purely on what is best for the economy. In fact, over the past 50 years, you will only find one period when eyebrows were raised. That was during the Nixon administration.

Under Fed Chair Arthur Burns, the central bank was accused of pumping money in the the system and cutting rates to make things look prosperous in advance of the 1972 election. But it later all blew up when the U.S. headed into a period of double-digit inflation.

Aside from that, you will be hard-pressed to find real evidence of interference. In fact, since then, presidential candidates from both parties have complained about the Fed.

Nonetheless, could the rate cut play into the election campaign?

In terms of how Americans feel about the economy? Not really. I don’t think mortgage rates will drop much more. And although the news is encouraging for borrowers, there is another side of rate cuts: They are negative for some types of investors. Money market investors, for example, will not look upon the Fed move so fondly.

But that doesn’t mean the two presidential tickets won’t try to turn the news to their benefit.

Democrats will happily take any credit for getting inflation back down on their watch and will point out how it will help Americans with home loans – avoiding the fact that they don’t actually have any role in the rate decisions themselves.

Meanwhile, Republicans might well say: “Hey, the Fed dropped rates because the economy is worse than we thought. And a half-point cut means they are desperate, the economy is horrible and we are heading for recession because of the Biden administrations’s policies.”The Conversation

About the Author:

Michael Walden, Professor and Extension Economist, North Carolina State University

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

Economics & Fundamentals Opinions
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