InvestMacro

Is Gold Ready To Outshine Stocks?

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:

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.
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.
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.
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:

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.
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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

25 Sep

USD/JPY Stabilises Amid Bank of Japan’s Cautious Signals

By RoboForex Analytical Department

The USD/JPY pair has found a stable footing around 143.22 as investors carefully analyse the recent comments from Bank of Japan Governor Kazuo Ueda. His remarks suggest that the BoJ is taking a measured approach to monetary policy adjustments, signalling a possible delay in interest rate hikes.

Governor Ueda emphasised the need to thoroughly analyse market and economic conditions before making policy decisions, indicating that immediate rate hikes are unlikely. He also highlighted external risks, including financial market volatility and uncertainties surrounding the US economy, which are critical considerations for Japan’s monetary policy.

At its September meeting, the BoJ maintained the interest rate at 0.25% per annum, aligning with market expectations. Speculation suggests that the October meeting may not change the Monetary Policy Committee’s structure. Still, by December, the BoJ might gather sufficient evidence to justify a rate increase.

The recent dip in the US dollar, spurred by weak consumer confidence figures in the US, has incidentally strengthened the yen. This shift has heightened expectations for further rate cuts by the Federal Reserve.

Technical Analysis of USD/JPY

The USD/JPY is currently in a broad consolidation range centred around 143.43, extending to 144.66. The market has initiated a downward movement towards 142.55, testing this level from above. Subsequently, we anticipate a rebound to the upper boundary of this range. A breach above 144.70 could pave the way for a rise to 145.77, potentially extending to 146.66. Conversely, a decline to 142.00 and a subsequent breakdown could signal a trend continuation towards 137.77. The MACD indicator supports this bullish scenario, with its signal line positioned above zero and pointing upwards.

On the H1 chart, USD/JPY has crafted a consolidation range around 143.60, achieving the 142.90 local downside target. The pair is now moving upward towards 143.60, testing this level from below. The current setup suggests a retest of 143.60 could be followed by a new decline towards 142.55. The Stochastic oscillator, with its signal line above 50 and pointing upwards, corroborates this potential for a brief uptick followed by a continued downward trajectory.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Forex and Currency News

25 Sep

Chinese indices rise on PBoC stimulus. In Australia, inflationary pressures are easing

By JustMarkets

At Tuesday’s close, the Dow Jones Index (US30) was up 0.20%, while the S&P 500 Index (US500) added 0.25%. The NASDAQ Technology Index (US100) closed positive 0.56%.

Hawkish comments from Fed Chair Bowman, the only dissenter to last week’s 50 bps cut in the Fed Funds rate, put some pressure on stocks on Tuesday when she said the Fed should cut interest rates at a “moderate” pace as inflation risks persist and the labor market is not showing much weakening. The Conference Board’s Consumer Confidence Index for September unexpectedly fell by 6.9 to 98.7 against expectations for a rise to 104.0. The Richmond Fed survey for September unexpectedly fell 2 to a 4–1/3 year low of 21, weaker than expectations of a rise to 12. Markets await inflation news on Friday when the core PCE Price Index, the Fed’s preferred gauge of inflation, is released. Consensus expects the PCE Price Index to rise 0.2% m/m in August and increase 2.7% y/y from 2.6% y/y in July.

Equity markets in Europe were mostly up on Tuesday. Germany’s DAX (DE40) rose by 0.80%, France’s CAC 40 (FR40) closed 1.28% higher, Spain’s IBEX 35 (ES35) gained 0.33%, and the UK’s FTSE 100 (UK100) closed up 0.28%. Weak economic data reinforced expectations that the ECB would ease monetary policy to support the struggling European economy. The latest data showed that business morale in Germany fell more than expected to an 8-month low.

Sweden’s Riksbank cut its key rate by 25 basis points to 3.25% at its September 2024 meeting, following a similar move in August and in line with market expectations. In addition, policymakers have signaled further rate cuts at the two remaining monetary policy meetings this year if the outlook for inflation and economic activity remains unchanged, with one of those meetings potentially cutting the rate by 50 basis points.

WTI crude oil prices hovered near $71.4 a barrel on Wednesday, trying to extend the previous session’s gains as markets continued to assess China’s economic intervention. On Tuesday, China’s central bank announced the largest economic stimulus in four years and growth targets, improving the outlook for demand from the world’s top oil importer. At the same time, fears of supply disruptions in the Middle East are growing as risks of a wider conflict escalate.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) decreased by 1.08%, China’s FTSE China A50 (CHA50) was up 6.04%, Hong Kong’s Hang Seng (HK50) added 4.06%, and Australia’s ASX 200 (AU200) was positive 0.28%. Chinese indices rose for a second day and held firmly at their highest level in four months as all sectors made further strong gains. Aggressive stimulus measures adopted by China’s Central Bank on Tuesday to support the ailing economy continued to boost sentiment.

The Australian dollar climbed to $0.69, ending at its highest level since February 2023, as investors reacted to the latest inflation report. The data showed Australia’s monthly Consumer Price Index fell to a three-year low of 2.7% in August, back within the Central Bank’s target range of 2–3%, although the drop was mainly due to temporary government energy rebates. The Australian dollar also rose thanks to China’s latest stimulus package, which could support demand in Australia’s biggest export market.

S&P 500 (US500) 5,732.93 +14.36 (+0.25%)

Dow Jones (US30) 42,208.22 +83.57 (+0.20%)

DAX (DE40) 18,996.63 +149.84 (+0.80%)

FTSE 100 (UK100) 8,282.76 +23.05 (+0.28%)

USD Index 100.28 -0.19 (-0.19%)

News feed for: 2024.09.25

Australia Consumer Price Index (m/m) at 04:30 (GMT+3);
Singapore Consumer Price Index (m/m) at 08:00 (GMT+3);
Switzerland KOF Leading Indicators (m/m) at 10:00 (GMT+3);
Sweden Riksbank Interest Rate Decision (m/m) at 10:30 (GMT+3);
US Building Permits (m/m) at 15:30 (GMT+3);
US New Home Sales (m/m) at 17:00 (GMT+3);
US Crude Oil Reserves (w/w) at 17:30 (GMT+3).

By JustMarkets

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News

24 Sep

Markets rally on China stimulus cheer

By ForexTime

FXTM Asian stock indices rally

CN50 ↑ 6% on “risk-on” mood

Oil benchmarks soar ↑ +2%

AUDUSD hits fresh 2024 highs

Bloomberg FX model – 74% – (0.6757 – 0.6933)

China has hijacked the headlines after its central bank unleashed a wave of stimulus measures to revive economic growth.

In a move welcomed by investors on Tuesday, the People’s Bank of China (PBoC) cut benchmark interest rates while unveiling measures to restore market confidence and ailing property sector.

This development triggered a “risk-on” mood across Asia during early trading, propelling FXTM’s Asian stock indices higher.

CN50: +6.2%

CHINAH: +5.0%

HK50: +4.3%

China’s raft of stimulus measures comes less than one week after the Federal Reserve cut interest rates for the first time in 4 years. With the world’s second largest economy on a mission to achieve its 5% annual growth target, this could boost overall market sentiment.

In fact, European markets rallied this morning while US equity futures are pointing to a positive open.

EU50: 1.2%

China will remain the key talking point this week, but it will be wise to keep a close eye on other assets linked to its economy.

For instance, oil benchmarks.

Oil prices jumped over 2% this morning following the positive developments with China.

BRENT: +2.5%

Crude: +2.3%

Over the past few months, the global commodity has been pressured by concerns over China’s economy and prospects of increased supplies from OPEC+. But this latest news regarding China’s stimulus could boost confidence in the country’s economic outlook, supporting oil as a result.

Note: China is one of the largest energy consumers in the world.

Oil markets could see more volatility today depending on how markets react to OPEC’s annual world oil outlook and ongoing geopolitical developments.

Looking at the technicals, Brent is pushing higher on the daily charts. A solid breakout above $75 may encourage an incline toward $76.90 – where the 50-day SMA resides.

Brent

In the FX space, keep an eye on the Australian Dollar.

The Aussie has appreciated against most G10 currencies since the start of September.

With the Reserve Bank of Australia (RBA) leaving interest rates unchanged and still sounding hawkish, this could keep the AUD supported.

Traders are currently pricing in a 55% probability of a 25-basis point RBA cut by the end of 2024.

It is worth keeping in mind that the recent developments in China could influence the Aussie – considering how China is Australia’s biggest trading partner.

Note: Australia August CPI will be published on Wednesday.

Looking at the charts, the AUDUSD hit a fresh 2024 high today with prices trading out of its weekly range.

Should the upside momentum hold, this may push prices toward the 200-week SMA at 0.6960.

A move back under 0.6800 could encourage a decline toward 0.6650.

Bloomberg FX model – 74% probability AUDUSD trades between 0.6757 – 0.6933 over next one week period

Article by ForexTime

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

Economics & Fundamentals Financial News

24 Sep

AUD/USD Reaches Yearly High Amid Positive Stimulus News from China

By RoboForex Analytical Department

The AUD/USD pair tested the 0.6860 mark on Tuesday, reaching its highest point in 2024, bolstered by supportive economic news from China. The People’s Bank of China (PBoC) announced stimulus measures to boost the Chinese economy. These measures positively influence the Australian dollar due to the close economic ties between Australia and China.

The Reserve Bank of Australia (RBA) is expected to maintain its interest rate, reflecting mixed sentiment among market participants regarding the future rate trajectory. According to a recent Reuters poll of 44 economists, only four anticipate a rate cut by year-end. However, investors assign a 60% probability of a rate reduction in December.

So far, the RBA has maintained a conservative stance regarding inflation and economic activity, believing that the economy can self-adjust without intervention. Nonetheless, the global trend towards rate cuts initiated by central banks, such as the Fed and the ECB, may influence the RBA’s perspective in the future.

AUD/USD technical analysis

The AUD/USD has completed the fifth wave of growth, reaching a target of 0.6864. Currently, a potential initial wave of decline to 0.6740 is being considered. After reaching this level, a corrective move to 0.6803 could occur, marking the upper limits of a new consolidation range. A downward exit from this range might lead to further declines towards 0.6740, with a potential continuation down to 0.6677 and possibly extending to 0.6616. The MACD indicator, currently at its peak, suggests an impending decline, supporting this bearish outlook.

On the H1 chart, the AUD/USD is forming a downward structure targeting 0.6805. Subsequently, a narrow consolidation range may develop, with a potential downward breakout leading to further declines towards 0.6744. This scenario is corroborated by the Stochastic oscillator. Its signal line currently above 80 but poised to move downward sharply.

Disclaimer

Financial News Forex and Currency News

24 Sep

China announced a broad stimulus for the economy. The RBA kept the rate at 4.35%

By JustMarkets

At Monday’s close, the Dow Jones (US30) was up 0.15%, while the S&P 500 (US500) added 0.28%. The NASDAQ Technology Index (US100) closed positive 0.14%. Optimism that the Fed will be able to achieve a soft landing for the economy is supporting stock prices. Minneapolis Fed President Kashkari and Chicago Fed President Goolsbee said yesterday that they support additional Fed rate cuts this year.

Intel (INTC) closed higher by more than 3% following a Bloomberg report that Apollo Global Management has offered to make a multi-billion dollar investment in Intel. Tesla (TSLA) rose more than 4% after Barclays said it expects the company’s third-quarter deliveries to exceed consensus estimates, which could further boost the stock.

Equity markets in Europe were mostly up on Monday. Germany’s DAX (DE40) rose by 0.68%, France’s CAC 40 (FR40) closed 0.10% higher, Spain’s IBEX 35 (ES35) Index gained 0.38%, and the UK’s FTSE 100 (UK100) closed up 0.36%. The S&P Eurozone Manufacturing PMI for September fell by 1.0 to 44.8, weaker than expectations of 45.7 and the sharpest rate of contraction in 9 months. The Eurozone Composite PMI for September fell by 2.1 to 48.9, weaker than expectations of 50.5 and the sharpest rate of contraction in 8 months. Investors are now betting on an additional ECB rate cut of around 44 basis points this year, with a 40% chance of a rate cut in October.

WTI crude oil prices climbed above $71 a barrel on Tuesday, rebounding from the previous session’s losses as the prospect of supply disruptions outweighed concerns about sluggish demand. Rising tensions in the Middle East have heightened fears of a wider conflict in the key oil-producing region after Israeli strikes on Lebanon on Monday. Investors are also watching the risk of a possible hurricane on the US Gulf Coast, which could impact oil production later this week. In addition, China announced a series of stimulus measures to support its economy, easing some concerns about sluggish demand from the world’s top oil consumer.

Asian markets traded flat yesterday. Japan’s Nikkei 225 (JP225) was up 1.53%, China’s FTSE China A50 (CHA50) added 0.57%, Hong Kong’s Hang Seng (HK50) was down 0.06%, and Australia’s ASX 200 (AU200) was negative 0.69%.

The ASX 200 Index (AU200) fell by 0.13%, extending the previous session’s losses after the Reserve Bank of Australia (RBA) expectedly left the cash rate unchanged at 4.35% amid continued high core inflation and lingering uncertainty over the overall outlook. The RBA also stated that the latest projections suggest that inflation will take some time to steadily return to the target range, indicating that it may need to keep higher rates for longer.

The offshore yuan strengthened to 7.03 per dollar, hitting a new sixteen-month high after a brief decline earlier in the session, helped by significant stimulus measures announced by the People’s Bank of China (PBoC). The Central Bank unveiled a number of initiatives, including a 50bp cut in the reserve requirement ratio, a 20bp cut in the seven-day reverse repo rate and a 30bp cut in the medium-term lending rate. In addition, the benchmark lending rates are expected to be cut by 20–25 bps after holding them at the September fixing level. The PBOC also plans to cut existing mortgage rates by about 50 basis points, potentially reducing households’ interest payments by about ¥150 billion.

S&P 500 (US500) 5,718.57 +16.02 (+0.28%)

Dow Jones (US30) 42,124.65 +61.29 (+0.15%)

DAX (DE40) 18,846.79 +61.29 (+0.15%)

FTSE 100 (UK100) 8,259.71 +29.72 (+0.36%)

USD Index 100.90 +0.05 (+0.05%)

News feed for: 2024.09.24

Japan Manufacturing PMI (m/m) at 03:30 (GMT+3);
Japan Services PMI (m/m) at 03:30 (GMT+3);
Australia RBA Interest Rate Decision (m/m) at 07:30 (GMT+3);
Australia RBA Rate Statement (m/m) at 07:30 (GMT+3);
Eurozone German IFO Business Climate (m/m) at 11:00 (GMT+3);
US CB Consumer Confidence (m/m) at 17:00 (GMT+3);
Canada BOC Gov Macklem Speaks at 19:55 (GMT+3).

By JustMarkets

Economics & Fundamentals Financial News

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.

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

23 Sep

Gold Reaches New Record as Investors Eye Further Rate Cuts

By RoboForex Analytical Department

Gold prices soared to a new all-time high, with the troy ounce surpassing 2614 USD. This surge is primarily driven by expectations of additional interest rate cuts and ongoing geopolitical tensions, which enhance gold’s appeal as a safe-haven asset.

Following the US Federal Reserve’s decision last week to reduce its interest rate by 50 basis points – the first such cut in four years – the market expects an equivalent reduction by the year’s end. This week, attention is focused on upcoming US macroeconomic releases, including the Core PCE report and personal income and expenditures data. These indicators will provide insights into the potential direction of future Fed rate adjustments.

Gold becomes increasingly attractive as an investment during periods of lower lending costs, which typically lead to reduced yields on government bonds and a lower Dollar Index (DXY). Unlike other assets, gold does not generate coupon income, making it more appealing when other yields decline.

Additionally, the escalation of hostilities between Israel and Gaza has further boosted demand for gold. In times of heightened global uncertainty and conflict, gold traditionally performs well as a defensive investment.

Despite some strengthening of the US dollar, this has not significantly impacted the upward trajectory of gold prices.

Technical analysis of gold (XAU/USD)

Gold has broken through the resistance at 2611.00 USD and is now targeting 2672.00 USD. Upon reaching this level, a corrective movement back to 2611.00 USD may occur, followed by another growth phase targeting 2750.00 USD. The MACD indicator supports this bullish outlook, with the signal line well above zero and ascending sharply.

The H1 chart shows that gold has reached 2611.00 USD and is now consolidating around this level. The consolidation range is defined between 2603.00 USD and 2625.25 USD. A breakout above 2625.25 USD would likely lead to a continuation of the upward momentum towards 2672.00 USD, confirming the ongoing bullish trend. This scenario is corroborated by the Stochastic oscillator, with its signal line progressing towards 80, indicating sustained upward momentum.

Disclaimer

Financial News Metals

23 Sep

Bitcoin has reached the $64000 mark. Oil rises amid escalating conflict in the Middle East

By JustMarkets

On Friday, the Dow Jones (US30) Index gained 0.09% (+2.52% for the week), while the S&P 500 (US500) Index fell by 0.19% (+1.56% for the week). The NASDAQ Technology Index (US100) closed negative 0.36% (for the week +2.13%). Friday marked the quarterly expiration of futures and options. About $5.1 trillion worth of contracts expired on Friday, according to data from the Asym 500 analyst firm. The expiration also coincided with the rebalancing of benchmark indexes. The event has a reputation for sudden price movements as traders shift existing positions to new contracts.

FedEx (FDX) is falling more than 15% after the company reported Q1 adjusted EPS well below consensus and lowered its 2025 adjusted EPS estimate.

Canadian retail sales likely rose sharply in August after a solid July gain, signaling a strong rebound after two consecutive quarters of declining sales. The report sends a more optimistic signal about the strength of the Canadian economy than the latest gross domestic product data, which indicated growth stalled in June and July. The data may give Central Bank officials more confidence to curb inflation without plunging the economy into recession.

Bitcoin (BTC/USD) surpassed the $64,000 mark, hitting a one-month high and adding nearly 10% to its monthly gains. The moves came as the US Federal Reserve cut rates by 50 basis points this month and announced plans for permanent policy easing. Traders now see the $70,000 mark as potential resistance for Bitcoin, as they did in late July.

Equity markets in Europe were steadily declining on Friday. Germany’s DAX (DE40) fell by 1.49% (for the week +0.53%), France’s CAC 40 (FR40) closed down 1.51% (for the week +0.92%), Spain’s IBEX 35 (ES35) fell 0.21% (for the week +2.02%), and the UK’s FTSE 100 (UK100) closed down 1.19% (for the week -0.52%). European equities closed lower on Friday, reversing the previous session’s sharp gains as markets continued to assess the outlook for financial conditions this year following a series of Central Bank decisions this week. ECB Governing Council spokesman Rehn said on Friday that the ECB is clearly on track to ease monetary policy, with the pace and extent of easing dependent on fresh economic data and analysis.

WTI crude oil prices rose to $72 a barrel on Monday, extending their 3% gain from the previous week, boosted by the prospect of supply disruptions amid rising tensions in the Middle East. Hezbollah reportedly fired more than 100 rockets into northern Israel on Sunday. The attack followed an Israeli airstrike on Beirut on Friday that killed at least 45 people, including a top Hezbollah leader. However, concerns about Chinese demand remain, exacerbated by slowing production at refineries and weak industrial demand.
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Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) rose by 2.28%, China’s FTSE China A50 (CHA50) gained 0.62%, Hong Kong’s Hang Seng (HK50) jumped by 5.55%, and Australia’s ASX 200 (AU200) posted a positive 1.35%.

Malaysia’s annual inflation rate unexpectedly came in at 1.9% for August 2024, compared to market estimates of 2.0%. This was the lowest rate since April. Core consumer prices, excluding volatile fresh food and administrative expenses, were 1.9% y/y, unchanged for the fifth month and maintaining the strongest growth since December 2023. On a monthly basis, CPI rose by 0.1%, unchanged for the second consecutive month.

The Australian dollar edged above $0.68 on Monday, near its highest levels this year, as traders await the Reserve Bank of Australia’s (RBA) decision this week. The Central Bank is expected to leave rates unchanged on Tuesday amid strong labor market data and continued inflationary pressures. Markets don’t expect a rate cut until at least December, with some economists expecting the first move in February or even the second quarter of 2025.

The People’s Bank of China (PBOC) unexpectedly cut its 14-day reverse repo rate by 10 basis points to 1.85% on September 23, 2024 from 1.95% previously. The Central Bank also injected 74.5 billion yuan of liquidity into the banking system. Monday’s measures came ahead of the National Day holiday, a seven-day break beginning October 1.

S&P 500 (US500) 5,702.55 −11.09 (−0.19%)

Dow Jones (US30) 42,063.36 +38.17 (−0.091%)

DAX (DE40) 18,720.01 −282.37 (−1.49%)

FTSE 100 (UK100) 8,229.99 −98.73 (−1.19%)

USD Index 100.74 +0.02 (+0.02%)

News feed for: 2024.09.23

Australia Manufacturing PMI (m/m) at 02:00 (GMT+3);
Australia Services PMI (m/m) at 02:00 (GMT+3);
German Manufacturing PMI (m/m) at 10:30 (GMT+3);
German Services PMI (m/m) at 10:30 (GMT+3);
Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+3);
Eurozone Services PMI (m/m) at 11:00 (GMT+3);
UK Manufacturing PMI (m/m) at 11:30 (GMT+3);
UK Services PMI (m/m) at 11:30 (GMT+3);
US FOMC Member Bostic Speaks at 15:00 (GMT+3);
US Manufacturing PMI (m/m) at 16:45 (GMT+3);
US Services PMI (m/m) at 16:45 (GMT+3);
US FOMC Member Kashkari Speaks at 20:00 (GMT+3).

By JustMarkets

Economics & Fundamentals Financial News

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:

The 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 Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	64.2	22.0	7.8
– Percent of Open Interest Shorts:	56.9	21.6	15.4
– Net Position:	1,798	83	-1,881
– Gross Longs:	15,897	5,438	1,935
– Gross Shorts:	14,099	5,355	3,816
– Long to Short Ratio:	1.1 to 1	1.0 to 1	0.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	7.9	100.0	3.5
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-30.6	33.3	-15.9

Euro Currency Futures:

The 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 Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	26.9	57.0	12.8
– Percent of Open Interest Shorts:	16.6	73.9	6.2
– Net Position:	69,646	-114,402	44,756
– Gross Longs:	182,281	386,396	86,454
– Gross Shorts:	112,635	500,798	41,698
– Long to Short Ratio:	1.6 to 1	0.8 to 1	2.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	50.0	46.4	72.0
– Strength Index Reading (3 Year Range):	Bearish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	15.4	-21.2	46.7

British Pound Sterling Futures:

The 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 Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	58.7	22.4	17.8
– Percent of Open Interest Shorts:	29.1	59.9	9.9
– Net Position:	62,979	-79,751	16,772
– Gross Longs:	124,822	47,645	37,880
– Gross Shorts:	61,843	127,396	21,108
– Long to Short Ratio:	2.0 to 1	0.4 to 1	1.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	64.4	29.7	97.4
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-5.1	0.5	21.2

Japanese Yen Futures:

The 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 Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	48.8	28.5	21.3
– Percent of Open Interest Shorts:	20.3	64.6	13.8
– Net Position:	56,840	-71,839	14,999
– Gross Longs:	97,332	56,915	42,545
– Gross Shorts:	40,492	128,754	27,546
– Long to Short Ratio:	2.4 to 1	0.4 to 1	1.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	100.0	0.0	100.0
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	28.3	-31.5	38.3

Swiss Franc Futures:

The 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 Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	14.7	59.7	24.6
– Percent of Open Interest Shorts:	43.9	29.5	25.6
– Net Position:	-17,108	17,728	-620
– Gross Longs:	8,579	34,982	14,395
– Gross Shorts:	25,687	17,254	15,015
– Long to Short Ratio:	0.3 to 1	2.0 to 1	1.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	66.2	28.4	74.4
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	10.1	-18.6	29.3

Canadian Dollar Futures:

The 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 Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	8.4	77.1	12.6
– Percent of Open Interest Shorts:	36.9	50.6	10.6
– Net Position:	-73,150	68,061	5,089
– Gross Longs:	21,464	197,838	32,218
– Gross Shorts:	94,614	129,777	27,129
– Long to Short Ratio:	0.2 to 1	1.5 to 1	1.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	55.2	44.2	45.8
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	48.6	-48.3	26.2

Australian Dollar Futures:

The 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 Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	31.8	50.1	16.2
– Percent of Open Interest Shorts:	55.4	31.3	11.4
– Net Position:	-40,122	31,978	8,144
– Gross Longs:	53,941	85,069	27,547
– Gross Shorts:	94,063	53,091	19,403
– Long to Short Ratio:	0.6 to 1	1.6 to 1	1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	56.8	41.2	76.2
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	0.1	-8.8	35.0

New Zealand Dollar Futures:

The 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 Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	42.1	46.3	11.3
– Percent of Open Interest Shorts:	45.9	46.8	7.0
– Net Position:	-1,890	-262	2,152
– Gross Longs:	20,758	22,813	5,579
– Gross Shorts:	22,648	23,075	3,427
– Long to Short Ratio:	0.9 to 1	1.0 to 1	1.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	37.3	55.1	80.8
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	28.6	-35.5	57.7

Mexican Peso Futures:

The 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 Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	37.1	57.4	3.3
– Percent of Open Interest Shorts:	31.2	62.2	4.4
– Net Position:	7,723	-6,352	-1,371
– Gross Longs:	48,486	74,941	4,349
– Gross Shorts:	40,763	81,293	5,720
– Long to Short Ratio:	1.2 to 1	0.9 to 1	0.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	35.3	65.9	8.6
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-28.3	27.5	-0.3

Brazilian Real Futures:

The 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 Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	23.9	69.1	4.0
– Percent of Open Interest Shorts:	72.3	20.6	4.0
– Net Position:	-32,306	32,321	-15
– Gross Longs:	15,913	46,077	2,665
– Gross Shorts:	48,219	13,756	2,680
– Long to Short Ratio:	0.3 to 1	3.3 to 1	1.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	21.4	79.5	20.8
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	21.4	-20.4	-4.3

Bitcoin Futures:

The 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 Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	77.0	5.0	4.0
– Percent of Open Interest Shorts:	80.1	3.1	2.8
– Net Position:	-973	596	377
– Gross Longs:	23,866	1,544	1,238
– Gross Shorts:	24,839	948	861
– Long to Short Ratio:	1.0 to 1	1.6 to 1	1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	51.8	79.9	21.5
– Strength Index Reading (3 Year Range):	Bullish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-22.7	33.5	4.5

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

Risk Disclosure: Foreign Currency trading and trading on margin carries a high level of risk and can result in loss of part or all of your investment. Due to the level of risk and market volatility, Foreign Currency trading may not be suitable for all investors and you should not invest money you cannot afford to lose. Before deciding to invest in the foreign currency exchange market you should carefully consider your investment objectives, level of experience, and risk appetite. You should be aware of all the risks associated with foreign currency exchange trading, and seek advice from an independent financial advisor should you have any doubts.

All information and opinions on this website are for general informational purposes only and do not constitute investment advice.