Month: January 2012

By CountingPips.com

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators continued to increase their Euro and British pound sterling short bets for a fourth consecutive week while long US dollar bets overall edged higher.

Non-commercial futures traders, usually hedge funds and large speculators, added to their total US dollar long positions to $18.77 billion on January 17th from a total long position of $17.43 billion on January 10th, according to the CFTC COT data and calculations by Reuters which calculates the dollar positions against the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

Individual Currencies:

EuroFX: Currency speculators continued to add to their Euro short positions as of January 17th and raised their short bets to a new record high. Euro short positions totaled 160,030 net short contracts from the previous week’s total of 155,195 net short contracts as speculator sentiment for the common European currency has declined for four consecutive weeks.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: Bearish bets of the British pound sterling rose for a fourth consecutive week as of January 17th and to the lowest level since December 6th. British pound positions saw a total of 41,634 short positions on January 17th following a total of 35,853 net short positions registered on January 10th. This is the lowest level since speculators were short by 43,560 contracts on December 6th.

JPY: The Japanese yen net long speculative contracts edged slightly lower but remained virtually unchanged from the previous week, according to the latest data on January 17th. Yen long positions dipped to a total of 58,862 net long contracts reported on January 17th following a total of 59,657 net long contracts that were reported on January 10th. Yen speculative positions on January 10th registered their highest level in over a year surpassing the August 2nd level when long positions leveled at 58,833 contracts.

CHF: Swiss franc speculators slightly increased their short bets against the Swiss currency as of January 17th although positions have barely changed in the past three weeks. Speculator positions for the Swiss currency futures numbered a total of 12,822 net short contracts on January 17th following a total of 12,097 net short contracts as of January 10th. Swiss contracts have now been on the short side by more than 10,000 contracts for four consecutive weeks.

CAD: Canadian dollar positions fell slightly for a third consecutive week to a total of 28,730 net short contracts as of January 17th following a total of 28,649 short contracts reported on January 10th. CAD positions are at their lowest level in at least a year.

AUD: The Australian dollar long positions advanced higher for a fourth consecutive week as of January 17th. Australian dollar positions increased to a total net amount of 54,306 long contracts on January 17th after totaling 53,526 net long contracts reported as of January 10th. The AUD speculative positions are at their highest level since August 2nd when Australian dollar long positions totaled 75,598.

NZD: New Zealand dollar futures speculator positions jumped higher and rose for a fourth consecutive week through January 17th. NZD contracts increased to a total of 9,455 net long contracts as of January 17th following a total of 5,029 net long contracts registered the previous week. NZD positions have increased for four straight weeks from the December 20th low standing (which was the lowest position since March 29th when positions equaled 239 long contracts) to the highest level since November 15th.

MXN: Mexican peso speculative contracts improved slightly against the US dollar for a second consecutive week. Peso short positions numbered a total of 17,328 net short speculative positions as of January 17th following a total of 22,332 short contracts that were reported on January 10th. Peso contracts are now after best level since November 15th when short contracts equaled 15,021.

COT Currency Data Summary as of January 17, 2012
Large Speculators Net Positions vs. the US Dollar

EUR -160030
GBP -41634
JPY +58862
CHF -12822
CAD -28730
AUD +54306
NZD +9455
MXN -17328

Other COT Trading Resources:

Trading Forex Using the COT Report

Greece and the ongoing debt negotiations with private creditors is once again going to be the talk of the week says Jyske Bank Senior Strategist Ib Fredslund Madsen.

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Video courtesy of en.jyskebank.tv

London Gold Market Report
from Ben Traynor
BullionVault
Monday 23 January 2012, 08:30 EST

THE U.S. DOLLAR cost to buy gold hit a six-week high of $1677 an ounce Monday morning in London, as stock markets, commodities and the Euro all pushed higher and US Treasury bond prices dipped.

“Near term technical have turned more bullish [for gold],” says the latest technical analysis from Scotia Mocatta, though it sees “psychological resistance looming at $1700.”

The price of buying gold in Euros however fell to €41375 (€1287 per ounce) – down slightly on Friday’s close – as European finance ministers met to discuss Greek debt and a proposal to relax banking rules.

The difference between long contracts to buy gold and short contracts held by noncommercial gold futures and options traders on New York’s Comex exchange – the so-called speculative net long – rose for the second week running in the week ended last Tuesday, according to the latest data from the Commodity Futures Trading Commission.

There was no change last week however in the volume of gold held to back shares in the SPDR Gold Trust (ticker: GLD), the world’s largest gold ETF.

Silver meantime hit $32.82 per ounce Monday morning – 1.8% above Friday’s close.

“Growing investor confidence is evident in [silver] ETF positioning,” reports Standard Bank commodities strategist Marc Ground this morning, citing ETF purchases of 341.8 tonnes in the past week.

One London broker reported Friday that the Sprott Physical Silver Trust (ticker: PSLV) bought around 311 tonnes of silver last week.

Shares in New York-listed PSLV meantime gapped lower at the start of Wednesday morning’s trade, opening 9.4% down on the previous day’s close – a result of “the instantaneous premium evaporation in PSLV,” says Gene Arensberg of GotGoldReport, which had previously warned its readers that the shares’ premium to PSLV’s net asset value could disappear “at the drop of a hat.”

“Ouch for the faithful PSLV buyers,” says Arensberg, “and shame upon the managers of PSLV for allowing the premium to get so out of whack to the upside.”

Eurozone finance ministers meantime met in Brussels on Monday, where they were expected to discuss the terms of Greek debt restructuring, with negotiations in Athens over recent days having failed to produce a deal.

“I remain quite hopeful [of reaching agreement],” Charles Dallara, managing director of the Institute of International Finance – which is negotiating on behalf of banks that hold Greek debt – said Sunday.

The IIF made an offer on Friday to accept voluntary private sector involvement that would amount to losses on Greek bonds of around 65-70%, according to press reports. Dallara described it as “the maximum offer consistent with a voluntary PSI deal”.

A sticking point is the size of the coupon on new bonds that will be swapped for existing ones. Both sides were thought to be close to agreeing an annual rate of between 4% and 4.5%, newswire Bloomberg reported.

Germany and the International Monetary Fund, however, want to see this cut to 3%, according to the New York Times, citing officials involved in the talks.

“I believe that the private sector can accept a lower coupon than the 4% average, but the question then is: will the PSI still be on a voluntary basis?” one senior Greek banker told newswire Reuters.

Any deal that is not voluntary risks triggering payments on credit default swaps – which payout in the event of default. Failure to agree debt restructuring meanwhile also risks jeopardizing Greece’s second bailout – without which it will be unable to pay €14.5 billion of maturing bonds on March 20.

Also at today’s Brussels meeting, German finance minister Wolfgang Schaeuble, along with his French opposite number Francois Baroin, will call for relaxation of banking rules, according to the Financial Times.

The pair will ask for elements of Basel III – the regulations on how much capital banks must hold, due to come into force in 2015 – to be loosened for banks that own insurance companies, such as French banks Societe Generale and Credit Agricole. They also propose a three-year delay for the deadline on disclosing leverage ratios – in contrast to UK regulators, who have called for disclosure ahead of schedule.

Baroin meantime has confirmed that France’s proposed financial transaction tax – one of the issues that led to British prime minister David Cameron walking out of European Union talks in December – will not apply to government bonds.

The US Federal Reserve meantime could make the historic move of announcing a specific inflation target when it gives its interest rate decision on Wednesday, Reuters reports.

Also in the US, Newt Gingrich – who last week said the United States should consider returning to the gold standard – won South Carolina’s Republican presidential primary on Saturday. One of his opponents, Mitt Romney, has subsequently bowed to calls to release his tax returns.

China has seen a “New Year’s rush” to buy gold to mark the Year of the Dragon, which begins today, the FT reports.

“Some customers just walk in and buy a bunch of 100g gold bars all at once,” it quotes one manager at Chines bank ICBC.

“People like to give them away…companies come in too to buy gold bars for presents.”
ICBC – the world’s largest bank by stock market cap – announced last week that 2.33 million Chinese citizens use its gold accumulation program, which currently holds 22 tonnes of gold.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Sunday, January 22nd, 2012:  GBP/USD found support at 1.5273 which was 6 pips below the support mentioned by us during the last weekend and quoted above. The GBPUSD pair took a strong upward move from there and touched 1.5578 and closed strongly for the week at 1.5575.

The price action of the last week indicates that we should see some more upward move if the resistance near 1.5630 gets broken. Even above 1.5620 we would expect frequent resistances near 1.5670 and 1.5700. A break over 1.5700 should bring further upward move towards strong resistance near 1.5780. Above 1.5700 our short-term outlook will become more neutral but we will expect convincing short-term reversal of the short-term downtrend only with a break over 1.5785.

Please note that every subsequent low of GBPUSD has been getting lower and also every subsequent high is also getting lower. This plus the overall price action combined with the overall bearish outlook from Euro region (EURUSD and GBPUSD are strongly correlated), keeps out mid-term outlook bearish.
On the downside, another strong break below 1.5400 should take GBPUSD to retest the recent 1.5279 and then 1.5233. A firm break below this and the minor support of 1.5220 should take the GBPUSD towards 1.5160. The psychological support of the approaching 1.5000 ranges should gain strength from this level.

You may also check daily technical analysis of gbp/usd and the weekend gbpusd forecast at ForexAbode.com.

Sunday, January 22nd, 2012:  AUD/USD moved up and broke over the resistance of 1.0381/1.0386 (Dec 8th and January 3rd resistance zone). The currency pair moved as high as 1.0489 and close strongly at 1.0485 for the last week. This move also broke over 1.0425/1.0445 resistance zone of November 2nd to November 8th.

The recent price action and the formation of the ascending parallel channel of support and resistance trend-lines, make us expect further upward movement with a break of 1.0500 psychological resistance. On the upside, a firm break over the psychological resistance of 1.0500 will make us expect some convincing upward gains towards 1.0610 and then probably 1.0720.

On the downside we would expect support near 1.0350 but a break over that would indicate a break below the above mentioned trend-line channel. If such a move takes place then AUDUSD should move a little further down towards 1.0220/1.0230 support and with a break of that to recent 1.0145.

This is not for the next week but any firm break below the recent 1.0145 will start making our short-term outlook towards bearish and then with any break of minor support of 1.0100, the currency pair should move towards 1.0044/1.0040 i.e. the earlier support area during December 28th/29th. A strong break of that will reverse our mid-term outlook for upward gains and will make us expect a move towards 0.9860/0.9880 support zone.

You may also check daily technical analysis of aud/usd and the weekend audusd forecast at ForexAbode.com.

Sunday, January 22nd, 2012:  EUR/JPY went down to 97.03 and found strong support there, which was little above the support of 96.80. The strong upward move broke the mentioned 99.90 resistance and then took EURJPY to 100.33 as we had mentioned. This strong correction briefly broke the resistance level of January 3rd and hence the price action makes us expect some more upward correction.

Overall we stay bearish but a break of 100.33 should bring in some more upward correction towards the 55-day EMA resistance of 100.65 and if a firm break takes over 100.65/100.80 range then we would expect some more correction towards the next resistance zone of 102.00 to 102.50. This zone would represent the resistance of the upper edge of the daily Ichimoku cloud as well as resistance area during the end of December 2011. Not only this but 102.50 is also the Fibonacci 38.2% retracement of the downward move from October 30th, 2011 to January 16th, 2011.

With the above mentioned resistances, including 101.33, we would expect another fall from one of these resistances. On the downside we would expect some support in the range of 98.50 to 98.70. This zone would represent the Tenkan-sen and Kijun sen support of daily Ichimoku cloud and also the low of the previous upward daily candle.  Any firm break of this should take EURJPY towards the recent bottom of 97.03 after some support near 97.50. Below 97.03 the supports expected are near 96.80. Near this level the strong psychological support of 95.00 would start working and any subsequent downward move should be slow and with frequent supports near 96.60 and above 96.20 and 95.60. But in case the market sentiments do not have sudden change because of some major economic news from the Euro zone, subsequently we expect a move towards 94.10/94.05 (inverse 61.8% projection of the upward correction between October 3rd to 30th and also the psychological aspects of the price action).
Overall our near-term bearish outlook will only change to expect some convincing upward gains if EURJPY breaks over 102.20/102.50 range firmly. In that case also the 105.00 range is expected to bring a strong resistance.

You may also check daily technical analysis of eur/jpy and the weekend eurjpy forecast at ForexAbode.com.

Sunday, January 22nd, 2012:  USD/CHF had broken the support of 0.9400 and went as low as 0.9307 (little below the next support level) and closed at 0.9345 for the last week. The recent low was just above January 4th’s low.

This was the first time since November 6th that USDCHF broke below the 55-day EMA level. On one side this price action makes the short-term outlook a bit negative even though the overall outlook stays bullish and we consider the recent move just as a correction/consolidation but the fact that the currency pair did not break below Jan 6th’s low of 0.9305 raises the question about further downward move. To expect further downward consolidation a break of 0.9305/0.9300 is required. On the downside if a strong break below 0.9305/0.9300 takes place then we would expect a good support in the range of 0.9200/0.9240. A move to 0.9200 will only be considered as the Fibonacci 38.2% retracement of the slow upward move during October 27th, 2011 to January 8th, 2012.

On the upside any strong break over 0.9410 and then a minor resistance near 0.9445 should make USDCHF to resume the upward move to retest 0.9596 and with a break over 0.9600, we would look forward to a move towards 0.9780, which represents the strong resistance during January 11th to February 11th, 2011. Any firm break over that should take the currency pair towards 0.9916 which represents, not only the strong resistance of December 8th, 2010 but will also start bringing in the psychological resistance of 1.0000 or parity.

The above outlook will stay good as long as USDCHF does not break below 0.9200. Such a break would start making our short-term outlook bearish to expect some more downward move towards the 0.9065/0.9090 level and then possibly towards 0.8965.

You may also check daily technical analysis of usd/chf and the weekend usdchf forecast at ForexAbode.com.

Sunday, January 22nd, 2012:  USD/JPY maintained the sideways even after breaking the previous range of 76.60 to 77.10 on both sides. The outlook remains neutral for USDJPY considering the price action and the strong psychological support and resistance levels of 75.00 and 80.00.

The break below the lows of Mid-November had indicated some increase in bearish sentiments but overall the way USDJPY has been moving leaves nothing much to say about it. With the current upward move, the first thing we would be watching is for a break over 76.36 (January 6th resistance) to expect further upward move. Even with that break we would expect a good resistance near 77.50 or a little above daily Ichimoku cloud’s lower edge resistance level. A break over that should take USDJPY towards 77.80 or the upper edge resistance of the daily Ichimoku cloud and then 78.22 and only a break above that will make us expect further upward gains towards 79.50.

On the downside any strong break below 76.60/76.55 would again bring frequent supports near 76.40, 76.20 and 76.00 because of the upcoming psychological level of 75.00 ranges. Overall on the downside a strong break below 75.80 and some sustained action below 75.80 would make us expect deeper movements.

This is not for the next week but overall we stay bearish for USDJPY for the longer-term basis at least till a firm break of 85.52 does not take place and this level becomes a support level instead of resistance. Also, the psychological support of 75.00 should prove to be quite strong and hence any downward move should not have a great momentum and should only be coming with frequent sideways moves. As mentioned during last weekend, if a break below 75.00 takes place then also we expect a strong support first near 74.80 and then over 74.20.

You may also check daily technical analysis of usd/jpy and the weekend usdjpy forecast at ForexAbode.com.

January 22nd, 2012:  GBP/JPY did not break below the support of 117. and jump upwards from 117.37. It then broke the resistance of 118.45 and then moved to 120.01. The last week’s close was almost exactly at 55-day EMA level.

The price action during last week suggests that we can expect some more upward moves. On the upside now a break over the next resistance zone of 120.20 to 120.30 is critical. If GBPJPY breaks over this resistance zone then we can expect further move up towards 121.10. 121.10 would represent the Fibonacci 38.2% retracement of the downward move from October 30th, 2011to January 13th, 2012. A break of this should pave the way to a move towards 121.80. After 121.80 the currency pair will enter a very strong resistance area between 121.80 to 122.80. The movement in this zone is expected to be slow and any trading between this zone needs to be cautiously done. Only a break over 122.80 will make our mid-term outlook to bearish in the true sense to expect the gains towards the major psychological level of 125.00.

The above mentioned outlook will stay in place till the support over 118.30/118.40 stays in place. On the downside if GBPJPY manages a strong break below this support range then our short-term focus will move back towards downside to retest 117.28. But we would expect the resumption of a real downward rally only with the break of 116.82 low. As mentioned last weekend, this area not only represents the previous strong support but also the 115.00 strong psychological support would start working from here.

You may also check daily technical analysis of gbp/jpy and the weekend gbpjpy forecast at ForexAbode.com.

Sunday, January 22nd, 2012:  EUR/USDr had touched 1.2624 last to last week but found a strong support at 1.2626 last week and jumped up. It touched 1.2986 and found some resistance there.
The break of 1.2880 resistance makes the short-term outlook neutral, even though the overall outlook stays bearish for EURUSD.

On the upside, if a break takes over 1.2986 then we would expect EURUSD to have some more upward correction towards the resistance zone of 1.3030 to 1.3080. This resistance zone comes into picture as 1.3030 represents the 55-day EMA and since end of November, 2011, the currency pair has not been able to break above it. 1.3006 to 1.3045 level would also bring the resistance of lower edge of the daily Ichimoku cloud. Over these levels, 1.3070 to 1.3083 represents a strong resistance zone during December 25th to January 4th.

In case EURUSD breaks over 1.2986 and then the above mentioned resistance zone then we would expect some more upward correction towards 1.3230/1.3050. This zone would represent the resistance zone of Fibonacci 38.2% retracement of the downward move from October 27th to the recent bottom of January 15th.

As we have mentioned that overall we stay bearish and are taking the current move only as correction/consolidation, we expect a fall from either of the above mentioned resistance levels. On the downside, we would expect some minor support in the range of 1.2810 to 1.2840. This support is based on the 22-day EMA as well as daily Ichimoku cloud’s Tenkan and Kijun-Sen level supports. A firm break of this support zone should take the euro-dollar pair to retest the recent 1.2626/1.2624 bottom.
This is not for the next week but overall, any break below 1.2624/1.2620 should take the currency pair to 1.2520. As mentioned last weekend, please note that we expect a slower downward momentum as the currency pair nears 1.2500 and we do not expect a break below that very fast but overall a strong break below 1.2500 should bring supports near 1.2460 and then 1.2420 and then the next target should be 1.2355. The recent support over 1.2620 was such an example. The psychological effect of 1.2500 had already started working there.

You may also check daily technical analysis of eur/usd and the weekend eurusd forecast at ForexAbode.com.