InvestMacro

Crude Oil Grew Confidently

By RoboForex Analytical Department

The commodity market efficiently reflected the improvement of the general situation. A Brent barrel on Monday is stabilising near 97.60 USD.

The main trigger for buying became an unexpected improvement in the forecasts on the global recession, which is a positive factor for the crude oil sector; also, there is a possibility that China will give up the zero tolerance regime in fighting with the coronavirus.

If these forecasts come true somehow, the commodity market will get serious support.

However, there are too few real reasons for softening the quarantine measures in China, and this understanding make commodity markets correct on Monday.

On H4, Brent has completed a wave of growth to 100.00. Today the market is forming a consolidation range under this level. Next, we expect a link of correction to 96.00. After it is over, a new wave of growth to 104.30 should start. The goal is local. Technically, this scenario is confirmed by the MACD. Its signal line is above zero in the histogram area, aimed strictly upwards.

On H1, Brent has formed a consolidation range around 96.50. With an escape upwards, the market has reached the goal of 100.00. This whole wave of growth is interpreted as the third one by the trend. Then we expect a link of correcting decline to 96.50. When this correction is over, another wave of growth to 100.00 should start. And when this level is broken away, a pathway for growth to 104.30 will open. Technically, this scenario is confirmed by the Stochastic oscillator. Its signal line is under 50. Further decline to 20 is expected.

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.

Energy Financial News

07 Nov

Trade Of The Week: Will USD continue to reign supreme?

By ForexTime

After dominating the FX space this year, could the dollar’s reign be coming to an end?

The past few weeks have been rough for the greenback thanks to renewed risk sentiment and markets scaling back bets for further aggressive Federal Reserve interest rate increases. Since the start of Q4, the dollar has depreciated against almost every single G10 currency – shedding more than 6% against the Norwegian Krone and over 5.7% versus the New Zealand Dollar.

Since hitting a fresh 20-year high above 114.50 back in late September, the Dollar Index (DXY) seems to be respecting a bearish channel, creating fresh lower lows and lower highs. With prices trading below the MACD and approaching the 110.00 support, a breakdown could be on the horizon.

There was a similar move on the equally-weighted dollar index which is wobbling above 1.2400 as of writing.

With the path of least resistance on the technical charts pointing south and the fundamentals slowly swinging in favour of bears as investors trim Fed hike bets, the dollar could end Q4 on a negative note. However, there are a couple of key US economic reports and one more Fed meeting in December which could heavily influence the dollar’s medium to longer-term outlook.

In the meantime, the dollar may be waiting for a fresh fundamental spark…and this could be the US inflation report on Thursday.

The low down…

Last week, king dollar surrendered its gains thanks to the improving market mood and growing expectations around the Federal Reserve delivering smaller rate hikes.

The Fed hiked interest rates by 75bps for the 4th straight time and Jerome Powell sent a clear message to markets about the potential for rates to peak higher than expected. Given how this move poured cold water around a dovish pivot, dollar bulls were injected with renewed confidence.

However, the jobs report for October sent mixed signals about the US labour market. Although the Nonfarm payrolls surged by 261k in October, above market forecasts of 200k – the unemployment rate rose to 3.7%, still close to a 50-year high. The mixed jobs report combined with soft economic data prompted market players to price in smaller rate hikes in the future. According to Bloomberg, traders have priced in a 50bps rate hike in December with the probability of a 75bps move only at 25%.

These reduced Fed hike bets may keep the dollar subdued ahead of the next major risk event. On a technical front, the damage is already being done on the equally weighted USD index which is struggling to keep above 1.2400. A breakdown below this point could trigger a selloff towards 1.2340 in the near term.

Will CPI data revive USD bulls?

The greenback is set to remain choppy and shaky ahead of the latest US inflation reading on Thursday.

Markets expect the headline CPI to have increased 8% year-on-year in October, down from 8.2% in September. In regards to Core CPI, which strips out the volatility from food and energy prices, it is expected to remain at a 40-year high of 6.6%. If the US inflation data exceeds market expectations, this may rekindle expectations around the Fed delivering jumbo hikes – resulting in a strong US dollar. Although a scenario where prices begin to slow may weaken the dollar and reduce rate hike expectations, inflation is still well above the Federal Reserve’s safe zone.

Time for dollar to sell off?

The equally weighted dollar index could be preparing to tumble lower if 1.2400 proves to be unreliable support. Prices remain in a bullish channel on the weekly charts but the heavily bearish candle printed last week signals a potential breakdown. Such a development could open the doors back towards 1.2184 and 1.1900, respectively. Should 1.2400 prove to be solid support, prices may rebound back towards 1.2500, 1.2750, and 1.2800, respectively.

Article by ForexTime

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

Forex and Currency News Opinions

07 Nov

A brief history of the mortgage, from its roots in ancient Rome to the English ‘dead pledge’ and its rebirth in America

By Michael J. Highfield, Mississippi State University

The average interest rate for a new U.S. 30-year fixed-rate mortgage topped 7% in late October 2022 for the first time in more than two decades. It’s a sharp increase from one year earlier, when lenders were charging homebuyers only 3.09% for the same kind of loan.

Several factors, including inflation rates and the general economic outlook, influence mortgage rates. A primary driver of the ongoing upward spiral is the Federal Reserve’s series of interest rate hikes intended to tame inflation. Its decision to increase the benchmark rate by 0.75 percentage points on Nov. 2, 2022, to as much as 4% will propel the cost of mortgage borrowing even higher.

Even if you have had mortgage debt for years, you might be unfamiliar with the history of these loans – a subject I cover in my mortgage financing course for undergraduate business students at Mississippi State University.

The term dates back to medieval England. But the roots of these legal contracts, in which land is pledged for a debt and will become the property of the lender if the loan is not repaid, go back thousands of years.

Ancient roots

Historians trace the origins of mortgage contracts to the reign of King Artaxerxes of Persia, who ruled modern-day Iran in the fifth century B.C. The Roman Empire formalized and documented the legal process of pledging collateral for a loan.

Often using the forum and temples as their base of operations, mensarii, which is derived from the word mensa or “bank” in Latin, would set up loans and charge borrowers interest. These government-appointed public bankers required the borrower to put up collateral, whether real estate or personal property, and their agreement regarding the use of the collateral would be handled in one of three ways.

First, the Fiducia, Latin for “trust” or “confidence,” required the transfer of both ownership and possession to lenders until the debt was repaid in full. Ironically, this arrangement involved no trust at all.

Second, the Pignus, Latin for “pawn,” allowed borrowers to retain ownership while sacrificing possession and use until they repaid their debts.

Finally, the Hypotheca, Latin for “pledge,” let borrowers retain both ownership and possession while repaying debts.

The living-versus-dead pledge

Emperor Claudius brought Roman law and customs to Britain in A.D. 43. Over the next four centuries of Roman rule and the subsequent 600 years known as the Dark Ages, the British adopted another Latin term for a pledge of security or collateral for loans: Vadium.

If given as collateral for a loan, real estate could be offered as “Vivum Vadium.” The literal translation of this term is “living pledge.” Land would be temporarily pledged to the lender who used it to generate income to pay off the debt. Once the lender had collected enough income to cover the debt and some interest, the land would revert back to the borrower.

With the alternative, the “Mortuum Vadium” or “dead pledge,” land was pledged to the lender until the borrower could fully repay the debt. It was, essentially, an interest-only loan with full principal payment from the borrower required at a future date. When the lender demanded repayment, the borrower had to pay off the loan or lose the land.

Lenders would keep proceeds from the land, be it income from farming, selling timber or renting the property for housing. In effect, the land was dead to the debtor during the term of the loan because it provided no benefit to the borrower.

Following William the Conqueror’s victory at the Battle of Hastings in 1066, the English language was heavily influenced by Norman French – William’s language.

That is how the Latin term “Mortuum Vadium” morphed into “Mort Gage,” Norman French for “dead” and “pledge.” “Mortgage,” a mashup of the two words, then entered the English vocabulary.

Establishing rights of borrowers

Unlike today’s mortgages, which are usually due within 15 or 30 years, English loans in the 11th-16th centuries were unpredictable. Lenders could demand repayment at any time. If borrowers couldn’t comply, lenders could seek a court order, and the land would be forfeited by the borrower to the lender.

Unhappy borrowers could petition the king regarding their predicament. He could refer the case to the lord chancellor, who could rule as he saw fit.

Sir Francis Bacon, England’s lord chancellor from 1618 to 1621, established the Equitable Right of Redemption.

This new right allowed borrowers to pay off debts, even after default.

The official end of the period to redeem the property was called foreclosure, which is derived from an Old French word that means “to shut out.” Today, foreclosure is a legal process in which lenders to take possession of property used as collateral for a loan.

Early US housing history

The English colonization of what’s now the United States didn’t immediately transplant mortgages across the pond.

But eventually, U.S. financial institutions were offering mortgages.

Before 1930, they were small – generally amounting to at most half of a home’s market value.

These loans were generally short-term, maturing in under 10 years, with payments due only twice a year. Borrowers either paid nothing toward the principal at all or made a few such payments before maturity.

Borrowers would have to refinance loans if they couldn’t pay them off.

Rescuing the housing market

Once America fell into the Great Depression, the banking system collapsed.

With most homeowners unable to pay off or refinance their mortgages, the housing market crumbled. The number of foreclosures grew to over 1,000 per day by 1933, and housing prices fell precipitously.

The federal government responded by establishing new agencies to stabilize the housing market.

They included the Federal Housing Administration. It provides mortgage insurance – borrowers pay a small fee to protect lenders in the case of default.

Another new agency, the Home Owners’ Loan Corp., established in 1933, bought defaulted short-term, semiannual, interest-only mortgages and transformed them into new long-term loans lasting 15 years.

Payments were monthly and self-amortizing – covering both principal and interest. They were also fixed-rate, remaining steady for the life of the mortgage. Initially they skewed more heavily toward interest and later defrayed more principal. The corporation made new loans for three years, tending to them until it closed in 1951. It pioneered long-term mortgages in the U.S.

In 1938 Congress established the Federal National Mortgage Association, better known as Fannie Mae. This government-sponsored enterprise made fixed-rate long-term mortgage loans viable through a process called securitization – selling debt to investors and using the proceeds to purchase these long-term mortgage loans from banks. This process reduced risks for banks and encouraged long-term mortgage lending.

Fixed- versus adjustable-rate mortgages

After World War II, Congress authorized the Federal Housing Administration to insure 30-year loans on new construction and, a few years later, purchases of existing homes. But then, the credit crunch of 1966 and the years of high inflation that followed made adjustable-rate mortgages more popular.

Known as ARMs, these mortgages have stable rates for only a few years. Typically, the initial rate is significantly lower than it would be for 15- or 30-year fixed-rate mortgages. Once that initial period ends, interest rates on ARMs get adjusted up or down annually – along with monthly payments to lenders.

Unlike the rest of the world, where ARMs prevail, Americans still prefer the 30-year fixed-rate mortgage.

About 61% of American homeowners have mortgages today – with fixed rates the dominant type.

But as interest rates rise, demand for ARMs is growing again. If the Federal Reserve fails to slow inflation and interest rates continue to climb, unfortunately for some ARM borrowers, the term “dead pledge” may live up to its name.

About the Author:

Michael J. Highfield, Professor of Finance and Warren Chair of Real Estate Finance, Mississippi State University

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

Opinions Real Estate

07 Nov

Murrey Math Lines 07.11.2022 (EURUSD, GBPUSD)

Article By RoboForex.com

EURUSD, “Euro vs US Dollar”

On H4, the quotes have broken through the 200-day Moving Average and are going above it, which signifies possible development of an uptrend. However, the RSI is nearing the overbought area. As a result, we should expect a test of 2/8 (1.0009), a bounce off it, and falling to the support level of 0/8 (0.9765). The scenario can be cancelled by an upward breakaway of the resistance level of 2/8 (1.0009). This may lead to further growth of the pair to 3/8 (1.0131).

On M15, an additional signal confirming the decline will be a breakaway of the lower border of VoltyChannel.

GBPUSD, “Great Britain Pound vs US Dollar”

On H4, the quotes have broken through the 200-day Moving Average and are going below it, which signifies possible development of a downtrend. The RSI is testing the resistance line. Currently, we should expect a downward breakaway of the support level of 6/8 (1.1230) and falling to 5/8 (0.0986). The scenario can be cancelled by an upward breakaway of the resistance level of 7/8 (1.1474). In this case, the pair may reach 8/8 (1.1718).

On M15, a breakaway of the lower line of VoltyChannel will increase the probability of price falling to 5/8 (0.0986) on H4.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Financial News Forex and Currency News

07 Nov

The cryptocurrency market digest (BTC, EUROC, KLAY). Overview for 07.11.2022

Article By RoboForex.com

The BTC is correcting after preceding growth, on Monday balancing near 20,723 USD.

Earlier the BTC rose to 21,258 USD. The rally – and for the crypto that had long been lingering to a narrow range this was a real rally – was based on rather good labour market statistics from the US.

On Friday, the US presented fresh reports on this sector; investors reacted positively, the market started rising and dragged the crypto behind.

What is next? The BTC is now likely to consolidate between 20,000-21,000 USD waiting for the Congress elections and the US inflation statistics (due on 10 November).

On Monday, the capitalisation of the crypto market is 1.028 trillion USD. The BTC takes up 38.9%, the ETH – 18.7%.

NFTs are in demand again

According to DappRadar, the popularity of the NFT market is increasing again, regardless of the BTC stagnation. Over a month, the number of unique investors in NFTs grew by 18%, reaching 1.11 million investors in October.

Circle launches EUR-bound stablecoin

Circle is launching the EUROC stablecoin, based on Solana and bound to the EUR. Several internetwork bridges are expected to be launched by 2023 in order to increase the popularity of the token.

KLAY quotes dropped by 18.3%

The Klayth (KLAY) coin became the most losing last week. It lost more than 18.3% of the price, and the capitalisation of the project dropped to 702.2 million USD. Sales brought the token to the 62th line of the rating of the most liquid cryptocurrencies. Most probably, this was a technical correction upon sky-rocketing earlier.

Article By RoboForex.com

Cryptocurrencies Financial News

07 Nov

The Analytical Overview of the Main Currency Pairs on 2022.11.07

By JustMarkets

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 0.9748
Prev Close: 0.9957
% chg. over the last day: +2.14 %

The US labor market data on Friday showed that Nonfarm payrolls added 261,000 jobs last month against expectations of 197,000, but the overall unemployment rate jumped from 3.5% to 3.7%. The US dollar fell sharply on this statistic as rising unemployment is the last piece of the puzzle for the Fed to put the brakes on aggressive rate hikes. A slowdown in the rate hikes is a negative for the dollar index and a positive for the European currency.

Trading recommendations

Support levels: 0.9850, 0.9794, 0.9755, 0.9702, 0.9601
Resistance levels: 0.9966, 1.0055, 1.0111, 1.0162, 1.0230

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is still bullish. The price failed to break down through the priority change level on Friday. The MACD indicator became positive, and the buying pressure returned. Under such market conditions, buy trades should be considered from the support level of 0.9850 or 0.97994, but with additional confirmation. Sell deals can be considered from the resistance level of 0.9966, but also with confirmation, as the level has already been tested.

Alternative scenario: if the price breaks down through the support level of 0.9755 and fixes below it, the downtrend will likely resume.

News feed for 2022.11.07:

– Eurozone Services PMI (m/m) at 11:00 (GMT+2);
– Eurozone ECB President Lagarde Speaks at 11:30 (GMT+2);
– US Nonfarm Payrolls (m/m) at 14:30 (GMT+2);
– US Unemployment Rate (m/m) at 14:30 (GMT+2).

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.1159
Prev Close: 1.1372
% chg. over the last day: +1.91 %

The Bank of England hiked its interest rate sharply by 0.75% last Thursday as it struggles with risks associated with the inflation of more than 10% and also warned of a prolonged recession. The Bank of England predicts that inflation will hit a 40-year high of about 11% in the current quarter and pointed out that Britain has already entered a recession that could potentially last two years – longer than during the 2008-09 financial crisis.

Trading recommendations

Support levels: 1.1230, 1.1172, 1.1093, 1.0915, 1.0817
Resistance levels: 1.1450, 1.1578, 1.1698, 1.1816, 1.1901

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages and above the priority change level. The MACD indicator has become positive, and buying pressure has returned to the market. Under such market conditions, buy trades can be considered from the support level of 1.1230, but better after confirmation. Sell trades are best to look for on intraday time frames. The nearest resistance level is 1.1450, but also better with confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down of the 1.1172 support level and fixes below it, the downtrend will likely resume.

There is no news feed for today.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 148.21
Prev Close: 146.65
% chg. over the last day: -1.06 %

The situation on the currency pair USD/JPY remains the same. The Bank of Japan keeps an ultra-soft monetary policy and does not plan to change it until spring 2023. The US Federal Reserve, in turn, is on an interest rate hike cycle. This divergent policy strengthens the dollar and weakens the Japanese yen, pushing the USD/JPY up. Even if the US Fed cuts the pace of its rate hikes, the interest rate differential will still rise, resulting in further gains, but maybe slower than before.

Trading recommendations

Support levels: 146.37, 145.50, 144.91, 144.19, 143.00
Resistance levels: 147.59, 148.82, 150.00, 151.05

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price is trading at the level of the moving averages, and a wide balance is forming. The MACD indicator has become negative again, but sellers’ pressure is weak. Under such market conditions, buy trades can be looked for on intraday time frames from the support level of 146.37. Sell deals can be looked for from the resistance level of 147.59 or 148.82, but only with additional confirmation since the level has already been tested.

Alternative scenario: If the price fixes above 150.00, the uptrend will likely resume.

There is no news feed for today.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.3745
Prev Close: 1.3479
% chg. over the last day: -1.97 %

Canadian labor market data on Friday pointed to job growth, raising the possibility that the Bank of Canada will need to make another excessive interest rate hike at its meeting next month. The money markets are now leaning towards the Bank of Canada raising its policy rate by 0.5% on December 7. The Bank of Canada’s discount rate is expected to peak at 4.5% in early 2023.

Trading recommendations

Support levels: 1.3486, 1.3400
Resistance levels: 1.3608, 1.3682, 1.3776, 1.3855, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bearish again. The price confidently broke through and consolidated below the moving averages and the priority change level. The MACD indicator is negative now, and there is the seller’s pressure on the lower time frames. The best way to sell is to consider the resistance level of 1.3608, but only after the additional confirmation. Buy trades should be considered on the lower time frames from the support level 1.3486, but with additional confirmation.

Alternative scenario: if the price breaks out and consolidates above the resistance level of 1.3682, the uptrend will likely resume.

There is no news feed for today.

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.

Financial News Forex and Currency News

07 Nov

The US is preparing for the primaries. Investors are returning interest in gold

By JustMarkets

By the closing of the stock market on Friday, Dow Jones (US30) gained 1.26% (-1.07% for the week), and S&P 500 (US500) added 1.36% (-2.87% for the week). The Technology Index NASDAQ (US100) jumped by 1.28% on Friday (-5.02% for the week). Despite Friday’s gains, all indices closed the week with losses.

The US unemployment rate was 3.7% (forecast 3.6%, previous value 3.5%). The only unfulfilled marker of recession in the US at the moment is an overheated labor market. The Fed has repeatedly noted an imbalance in supply and demand for jobs. So rising unemployment is the last piece of the puzzle for the Fed to put the brakes on aggressive rate hikes.

The US is gearing up for Tuesday’s midterm elections, where control of Congress and President Joe Biden’s agenda for the remaining two years of his term are at stake. Republicans are leading in the polls, and many analysts believe the likely outcome will be a split government, with the Republican Party controlling the House and possibly the Senate in the second half of Biden’s term. Biden’s public approval rating has remained below 50% for more than a year, at 40% in a recent Reuters/Ipsos poll. Analysts say a surprise Democratic victory could heighten fears about increased budget spending and the prospect of inflation.

Canada’s plan to spend an additional C$6.1 billion ($4.5 billion) over the next five months could undermine the central bank’s efforts to curb inflation, despite Finance Minister Chrystia Freeland’s pledge not to complicate monetary policy.

Equity markets in Europe traded higher throughout last week. German DAX (DE30) gained 2.51% (+1.55% for the week), French CAC 40 (FR40) increased by 2.77% (+2.18% for the week), Spanish IBEX 35 (ES35) added 0.97% (+0.33% for the week), British FTSE 100 (UK100) closed Friday in plus 2.03% (+4.07% for the week).

Last week’s fundamental catalysts boosted the indices. On the energy side, the warming in the Eurozone has helped lower energy prices, and this situation is expected to continue in November. Lower prices should provide further support to the euro against the US dollar. On the other hand, manufacturing orders are declining across European countries, which limits the growth prospects of the European currency.

Friday’s 5% rally in oil was fueled by talk that China is planning to soften its so-called zero COVID policy. It also became known that the G7 countries, along with Australia, finally agreed to set a fixed price for Russian oil. Expectations that the Fed could still resort to a rate hike were another factor in the rise in oil prices on Friday.

The Kremlin plans to retaliate against the G7 plan to cap the sale price of Russian oil to limit Moscow’s ability to finance its invasion of Ukraine without restricting global supplies. Russian President Vladimir Putin has in the past threatened not to do business with countries participating in the G7 plan or to suspend crude oil exports altogether in response to the scheme.

On Friday, gold showed its best percentage gain in 2.5 years. On a weekly basis, gold added 1.9%, its best week in four years. Hedge fund analysts believe that if gold manages to close the month above $1,735 an ounce, the short- and medium-term outlook will change to bullish.

Asian markets mostly rose last week. Japan’s Nikkei 225 (JP225) gained 0.38% over the week, Hong Kong’s Hang Seng (HK50) jumped by 8.97%, and Australia’s S&P/ASX 200 (AU200) gained 1.57%

Chinese and Hong Kong stocks rose sharply Friday amid rumors that China may soon ease its strict restrictions on COVID-19, but officials said Saturday that the country is sticking to its policy for now. China’s huge trade surplus rose less than expected in October, while exports and imports declined during the month. The data does not bode well for Asian markets, given that China is a major trading partner for much of the region.

In the commodities market, futures on cotton (+20.72%), natural gas (+13.36%), silver (+9.23%), copper (+7.93%), gasoline (+6.94%), sugar (+6.26%), orange juice (+5.89%), cocoa (+5.47%), WTI oil (+5.35%), soybeans (+4.45%), coffee (+3.47%), Brent (+3.11%) and gol (+2.49%) showed the biggest gain. Futures on lumber (-4.82%) showed the biggest drop.

S&P 500 (F) (US500) 3,770.55 +50.66 (+1.36%)

Dow Jones (US30) 32,403.22 +401.97 (+1.26%)

DAX (DE40) 13,459.85 +329.66 (+2.51%)

FTSE 100 (UK100) 7,334.84 +146.21 (+2.03%)

USD Index 110.79 -2.148 (-1.90%)

Important events for today:

– China Exports (m/m) at 05:00 (GMT+2);
– China Imports (m/m) at 05:00 (GMT+2);
– Switzerland Unemployment Rate (m/m) at 08:45 (GMT+2);
– German Industrial Production (m/m) at 09:00 (GMT+2);
– Eurozone ECB President Lagarde Speaks at 10:40 (GMT+2);
– US FOMC Member Mester Speaks at 22:40 (GMT+2).

By JustMarkets

Economics & Fundamentals Financial News

06 Nov

Gold: when the price goes up, more of it gets stolen in break-ins – new research

By Arnaud Chevalier, Royal Holloway University of London; Nils Braakmann, Newcastle University, and Tanya Wilson, University of Glasgow

Are criminals rational? In his groundbreaking work of 1968, Gary Becker argued that they are. The American economist, who would go on to win the Nobel prize in economics in 1992, theorised that individuals engage in crime only if the returns are greater than the returns from engaging in legal activities, after you factor in the risk of being caught.

This has been largely supported by empirical evidence. But one aspect of Becker’s model which has proven difficult to confirm is whether criminal activity is sensitive to changes in the financial returns from crime. This is mostly because those returns are themselves affected by criminal activity.

For example, when more phones are stolen, the supply of stolen phones increases and their retail value drops, which makes them less attractive to steal. Since the price affects the burglaries as well as the burglaries affecting the price, it can be difficult for researchers to empirically assess the extent to which each is affecting the other.

One way around this problem is to look at a commodity whose price won’t be affected by how much is stolen by criminals. We chose gold. The question our research asked was: how does the gold price affect the rate of burglary in England and Wales?

The burglary business

Jewellery is only stolen in 7% of burglaries. This is according to the Crime Survey for England and Wales (CSEW), which also says that these types of burglaries are perceived as more serious by the victims than other types. No doubt this is partially because of the sentimental value associated with some of the jewellery, but also because of its financial value.

Anecdotal evidence, supported by the CSEW, suggests that south Asian households are more likely to store gold jewellery, in some cases as a way of saving, though also for cultural reasons. This means that when the price of gold goes up, the returns from burgling a south Asian household will go up too. You might therefore expect the rational burglar to disproportionately target these households when the gold price is higher.

It might not be easy for these burglars to recognise a house as belonging to a south Asian family, but they will know which neighbourhoods tend to be popular with this ethnic group. So we should expect that when the price of gold goes up, burglars may become more active in neighbourhoods with a greater share of south Asian families.

Using detailed crime data at the neighbourhood level for the period 2011-19, we tested this hypothesis by comparing burglary rates in neighbourhoods with a relatively high share of south Asian households and neighbourhoods with a lower share. To make the comparison more pertinent, we only compared neighbourhoods within the same local authority, contrasting periods in which the gold price was low to when it was high.

What we consistently found was that burglaries increase when the price of gold surges. A 10% increase in the price of gold increases the burglary rate by an average of 1.5%. In south Asian neighbourhoods, however, burglaries increase by 3.4%.

The wider economy

You might be thinking that burglars aren’t responding to the gold price but to economic conditions more generally, but this is an unlikely explanation. There certainly is a link between burglary rates and economic conditions. For example, when unemployment rises, there are more burglaries everywhere.

But by comparing neighbourhoods within the same local authority, we found it was only neighbourhoods with a higher share of Asian households that saw a larger increase in the rate of burglaries when the price of gold increased. We also found that the location of other crimes was unaffected by variations in the gold price.

In any case, gold and the economy are not especially well correlated. The price of gold is determined by global supply and demand rather than economic conditions in the UK.

Finally, we showed that variations in the price of gold drive up the burglary rate in general. So it’s not just a case of burglars relocating their activities to neighbourhoods with a higher share of south Asian households. When gold is more valuable there are more burglaries, and disproportionately more in south Asian neighbourhoods.

Our results seem to confirm that burglars act rationally and redirect their efforts towards neighbourhoods with higher returns when the reward is greater. If police forces allocate more resources to visible police patrols in areas rich in potential targets when the price of gold or some other valuable commodity is high, it may prove a successful deterrent. Additionally, it might be helpful to introduce policies making it more difficult to resell jewellery.

To end on a positive, the gold price is around 20% down from the highs of the past couple of years. So long as that continues, the temptation to burglars should at least be slightly less than it was before.

About the Author:

Arnaud Chevalier, Professor of Economics, Royal Holloway University of London; Nils Braakmann, Professor of Economics, Newcastle University, and Tanya Wilson, Lecturer in Economics, University of Glasgow

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

Financial News Metals

06 Nov

Mexican Peso & Euro Currency Speculators sharply boost their bullish bets

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 November 1st and shows a quick view of how large market participants (for-profit speculators and commercial traders) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the euro will decline versus the dollar.

Weekly Speculator Changes led by Peso & Euro bets

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

Leading the gains for the currency markets were the Mexican peso (31,471 contracts), the Euro (30,881 contracts) and the Japanese yen (24,998 contracts) with the New Zealand dollar (9,037 contracts), the British pound sterling (2,969 contracts), the Australian dollar (914 contracts) and the Canadian dollar (506 contracts) also showing positive weeks.

The currencies leading the declines in speculator bets this week was the Swiss franc (-3,484 contracts) with Bitcoin (-475 contracts), the US Dollar Index (-310 contracts) and the Brazilian real (-22 contracts) also registering lower bets on the week.

Highlighting the COT currency data this week is the strong gains in the Mexican peso positioning since the start of October. Peso speculative positions jumped by over +30,000 contracts for a second straight week this week and have now been higher by at least +10,000 contracts in each of the past three weeks. Overall, the peso position has gained for five consecutive weeks and by a total of +85,367 contracts over that five-week period.

The renewed speculator optimism has brought the peso positioning from out of the bearish level it was in for nineteen straight weeks (from June 14th to October 18th) into a new bullish standing and to most bullish level since March 8th. The peso’s futures price has also been on the rise with a gain by over 1.50 percent this week. Peso prices have now risen in five out of the past six weeks and have reached their best level since early June.

Another highlight of this week’s COT data is the Euro’s continued gains in speculator positions. The large speculator contracts rose strongly yet again this week as the Euro position has now climbed for a third straight week and for the eighth time in the past nine weeks. The nine-week speculator’s total increase now stands at a whopping +153,466 contracts. The Euro position was in bearish territory as recently as September 13th (total of -11,837 contracts) and now the total speculator position is at +105,790 contracts (a 72-week high). However, despite this strong speculator sentiment, the Euro exchange rate versus the US dollar continues to only trade around parity or the 1.000 level. The speculators are usually reliable trend-followers (buying when prices rises and selling when prices fall) and this divergence between the price and speculator contracts is growing quite large and could foretell a possible strong future movement in the Euro one way or the other.

Data Snapshot of Forex Market Traders | Columns Legend

Nov-01-2022	OI	OI-Index	Spec-Net	Spec-Index	Com-Net	COM-Index	Smalls-Net	Smalls-Index
USD Index	55,942	80	29,788	75	-33,331	23	3,543	55
EUR	671,729	65	105,790	67	-128,819	39	23,029	16
GBP	243,549	63	-44,836	31	65,377	78	-20,541	18
JPY	258,906	86	-77,620	21	95,774	82	-18,154	17
CHF	50,107	41	-14,784	19	27,731	88	-12,947	14
CAD	147,170	28	-17,649	21	19,275	85	-1,626	27
AUD	165,411	56	-50,532	38	62,726	66	-12,194	23
NZD	47,219	38	-3,847	61	6,881	45	-3,034	17
MXN	282,864	88	44,045	46	-50,512	52	6,467	70
RUB	20,930	4	7,543	31	-7,150	69	-393	24
BRL	58,289	51	29,157	79	-29,139	23	-18	65
Bitcoin	12,183	67	-452	69	-16	0	468	24

Brazilian Real & US Dollar Index lead Strength Scores

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 Brazilian Real (79.0 percent) and the US Dollar Index (74.6 percent) lead the currency markets currently. Bitcoin (69.1 percent) and the EuroFX (67.5 percent) come in as the next highest in the currency markets in strength scores.

On the downside, the Swiss Franc (19.0 percent) comes in at the lowest strength level currently and is in a bearish extreme position under 20 percent. The Canadian Dollar (20.8 percent), the Japanese Yen (21.1 percent) and the British Pound Sterling (30.5 percent) come in as the next lowest scores.

Strength Statistics:
US Dollar Index (74.6 percent) vs US Dollar Index previous week (75.1 percent)
EuroFX (67.5 percent) vs EuroFX previous week (58.0 percent)
British Pound Sterling (30.5 percent) vs British Pound Sterling previous week (28.0 percent)
Japanese Yen (21.1 percent) vs Japanese Yen previous week (5.7 percent)
Swiss Franc (19.0 percent) vs Swiss Franc previous week (27.8 percent)
Canadian Dollar (20.8 percent) vs Canadian Dollar previous week (20.2 percent)
Australian Dollar (38.0 percent) vs Australian Dollar previous week (37.1 percent)
New Zealand Dollar (60.7 percent) vs New Zealand Dollar previous week (43.8 percent)
Mexican Peso (46.1 percent) vs Mexican Peso previous week (32.7 percent)
Brazilian Real (79.0 percent) vs Brazilian Real previous week (79.1 percent)
Bitcoin (69.1 percent) vs Bitcoin previous week (77.3 percent)

Peso & Euro top the Strength Trends

Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the Mexican Peso (30.7 percent) and the EuroFX (22.2 percent) lead the past six weeks trends for the currency markets this week. The New Zealand Dollar (16.4 percent) and the British Pound Sterling (8.6 percent) fill out the next top movers in the latest trends data.

The Canadian Dollar (-23.5 percent) leads the downside trend scores currently while the next markets with lower trend scores were the Swiss Franc (-20.4 percent) followed by Bitcoin (-17.9 percent).

Strength Trend Statistics:
US Dollar Index (3.1 percent) vs US Dollar Index previous week (-9.3 percent)
EuroFX (22.2 percent) vs EuroFX previous week (26.6 percent)
British Pound Sterling (8.6 percent) vs British Pound Sterling previous week (17.4 percent)
Japanese Yen (2.3 percent) vs Japanese Yen previous week (-13.5 percent)
Swiss Franc (-20.4 percent) vs Swiss Franc previous week (-10.1 percent)
Canadian Dollar (-23.5 percent) vs Canadian Dollar previous week (-36.5 percent)
Australian Dollar (-9.3 percent) vs Australian Dollar previous week (5.9 percent)
New Zealand Dollar (16.4 percent) vs New Zealand Dollar previous week (-14.2 percent)
Mexican Peso (30.7 percent) vs Mexican Peso previous week (16.2 percent)
Brazilian Real (-3.2 percent) vs Brazilian Real previous week (-3.7 percent)
Bitcoin (-17.9 percent) vs Bitcoin previous week (-1.8 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 29,788 contracts in the data reported through Tuesday. This was a weekly reduction of -310 contracts from the previous week which had a total of 30,098 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 74.6 percent. The commercials are Bearish with a score of 22.9 percent and the small traders (not shown in chart) are Bullish with a score of 55.3 percent.

US DOLLAR INDEX Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	75.6	10.3	11.5
– Percent of Open Interest Shorts:	22.4	69.9	5.2
– Net Position:	29,788	-33,331	3,543
– Gross Longs:	42,304	5,761	6,460
– Gross Shorts:	12,516	39,092	2,917
– Long to Short Ratio:	3.4 to 1	0.1 to 1	2.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	74.6	22.9	55.3
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	3.1	-4.1	7.6

Euro Currency Futures:

The Euro Currency large speculator standing this week came in at a net position of 105,790 contracts in the data reported through Tuesday. This was a weekly advance of 30,881 contracts from the previous week which had a total of 74,909 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 67.5 percent. The commercials are Bearish with a score of 39.5 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 15.7 percent.

EURO Currency Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	35.7	50.5	11.5
– Percent of Open Interest Shorts:	19.9	69.7	8.0
– Net Position:	105,790	-128,819	23,029
– Gross Longs:	239,770	339,364	77,062
– Gross Shorts:	133,980	468,183	54,033
– Long to Short Ratio:	1.8 to 1	0.7 to 1	1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	67.5	39.5	15.7
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	22.2	-21.7	6.6

British Pound Sterling Futures:

The British Pound Sterling large speculator standing this week came in at a net position of -44,836 contracts in the data reported through Tuesday. This was a weekly rise of 2,969 contracts from the previous week which had a total of -47,805 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 30.5 percent. The commercials are Bullish with a score of 78.5 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 17.7 percent.

BRITISH POUND Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	14.4	75.2	8.0
– Percent of Open Interest Shorts:	32.8	48.4	16.4
– Net Position:	-44,836	65,377	-20,541
– Gross Longs:	34,979	183,210	19,464
– Gross Shorts:	79,815	117,833	40,005
– Long to Short Ratio:	0.4 to 1	1.6 to 1	0.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	30.5	78.5	17.7
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	8.6	-5.5	-3.7

Japanese Yen Futures:

The Japanese Yen large speculator standing this week came in at a net position of -77,620 contracts in the data reported through Tuesday. This was a weekly advance of 24,998 contracts from the previous week which had a total of -102,618 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 21.1 percent. The commercials are Bullish-Extreme with a score of 82.4 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 16.6 percent.

JAPANESE YEN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	15.6	73.9	8.9
– Percent of Open Interest Shorts:	45.6	36.9	15.9
– Net Position:	-77,620	95,774	-18,154
– Gross Longs:	40,460	191,221	23,021
– Gross Shorts:	118,080	95,447	41,175
– Long to Short Ratio:	0.3 to 1	2.0 to 1	0.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	21.1	82.4	16.6
– Strength Index Reading (3 Year Range):	Bearish	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	2.3	-0.8	-3.9

Swiss Franc Futures:

The Swiss Franc large speculator standing this week came in at a net position of -14,784 contracts in the data reported through Tuesday. This was a weekly decrease of -3,484 contracts from the previous week which had a total of -11,300 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 19.0 percent. The commercials are Bullish-Extreme with a score of 87.7 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 13.7 percent.

SWISS FRANC Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	13.2	71.5	15.1
– Percent of Open Interest Shorts:	42.7	16.1	40.9
– Net Position:	-14,784	27,731	-12,947
– Gross Longs:	6,612	35,822	7,559
– Gross Shorts:	21,396	8,091	20,506
– Long to Short Ratio:	0.3 to 1	4.4 to 1	0.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	19.0	87.7	13.7
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-20.4	23.5	-22.7

Canadian Dollar Futures:

The Canadian Dollar large speculator standing this week came in at a net position of -17,649 contracts in the data reported through Tuesday. This was a weekly boost of 506 contracts from the previous week which had a total of -18,155 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 20.8 percent. The commercials are Bullish-Extreme with a score of 84.8 percent and the small traders (not shown in chart) are Bearish with a score of 26.8 percent.

CANADIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	26.2	50.5	21.2
– Percent of Open Interest Shorts:	38.2	37.4	22.3
– Net Position:	-17,649	19,275	-1,626
– Gross Longs:	38,522	74,352	31,212
– Gross Shorts:	56,171	55,077	32,838
– Long to Short Ratio:	0.7 to 1	1.3 to 1	1.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	20.8	84.8	26.8
– Strength Index Reading (3 Year Range):	Bearish	Bullish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-23.5	15.3	2.7

Australian Dollar Futures:

The Australian Dollar large speculator standing this week came in at a net position of -50,532 contracts in the data reported through Tuesday. This was a weekly lift of 914 contracts from the previous week which had a total of -51,446 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 38.0 percent. The commercials are Bullish with a score of 65.7 percent and the small traders (not shown in chart) are Bearish with a score of 22.7 percent.

AUSTRALIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	20.6	67.5	9.3
– Percent of Open Interest Shorts:	51.2	29.6	16.6
– Net Position:	-50,532	62,726	-12,194
– Gross Longs:	34,148	111,638	15,301
– Gross Shorts:	84,680	48,912	27,495
– Long to Short Ratio:	0.4 to 1	2.3 to 1	0.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	38.0	65.7	22.7
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-9.3	7.9	-1.5

New Zealand Dollar Futures:

The New Zealand Dollar large speculator standing this week came in at a net position of -3,847 contracts in the data reported through Tuesday. This was a weekly increase of 9,037 contracts from the previous week which had a total of -12,884 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 60.7 percent. The commercials are Bearish with a score of 45.4 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 16.8 percent.

NEW ZEALAND DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	44.7	48.9	5.7
– Percent of Open Interest Shorts:	52.9	34.4	12.2
– Net Position:	-3,847	6,881	-3,034
– Gross Longs:	21,115	23,103	2,707
– Gross Shorts:	24,962	16,222	5,741
– Long to Short Ratio:	0.8 to 1	1.4 to 1	0.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	60.7	45.4	16.8
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	16.4	-16.9	13.4

Mexican Peso Futures:

The Mexican Peso large speculator standing this week came in at a net position of 44,045 contracts in the data reported through Tuesday. This was a weekly boost of 31,471 contracts from the previous week which had a total of 12,574 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 46.1 percent. The commercials are Bullish with a score of 51.7 percent and the small traders (not shown in chart) are Bullish with a score of 70.4 percent.

MEXICAN PESO Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	64.5	32.1	3.0
– Percent of Open Interest Shorts:	48.9	50.0	0.7
– Net Position:	44,045	-50,512	6,467
– Gross Longs:	182,316	90,811	8,464
– Gross Shorts:	138,271	141,323	1,997
– Long to Short Ratio:	1.3 to 1	0.6 to 1	4.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	46.1	51.7	70.4
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	30.7	-31.0	9.2

Brazilian Real Futures:

The Brazilian Real large speculator standing this week came in at a net position of 29,157 contracts in the data reported through Tuesday. This was a weekly fall of -22 contracts from the previous week which had a total of 29,179 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 79.0 percent. The commercials are Bearish with a score of 22.9 percent and the small traders (not shown in chart) are Bullish with a score of 64.6 percent.

BRAZIL REAL Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	65.7	22.9	10.7
– Percent of Open Interest Shorts:	15.7	72.9	10.7
– Net Position:	29,157	-29,139	-18
– Gross Longs:	38,325	13,328	6,246
– Gross Shorts:	9,168	42,467	6,264
– Long to Short Ratio:	4.2 to 1	0.3 to 1	1.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	79.0	22.9	64.6
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-3.2	4.8	-20.2

Bitcoin Futures:

The Bitcoin large speculator standing this week came in at a net position of -452 contracts in the data reported through Tuesday. This was a weekly lowering of -475 contracts from the previous week which had a total of 23 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 69.1 percent. The commercials are Bullish with a score of 63.8 percent and the small traders (not shown in chart) are Bearish with a score of 23.6 percent.

BITCOIN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	73.6	3.3	10.0
– Percent of Open Interest Shorts:	77.3	3.5	6.2
– Net Position:	-452	-16	468
– Gross Longs:	8,967	406	1,218
– Gross Shorts:	9,419	422	750
– Long to Short Ratio:	1.0 to 1	1.0 to 1	1.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	69.1	63.8	23.6
– Strength Index Reading (3 Year Range):	Bullish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-17.9	38.7	5.3

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

06 Nov

Speculator Extremes: Soybean Meal, Wheat lead weekly COT Bullish & Bearish Positions

By InvestMacro

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on November 1st.

This weekly Extreme Positions report highlights the Top Most Bullish and Top 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 COT data table or COT leaders table.

Here Are This Week’s Most Bullish Speculator Positions:

Soybean Meal

The Soybean Meal speculator position comes in as the most bullish extreme standing this week. The Soybean Meal speculator level is currently at a 94.0 percent score of its 3-year range.

The overall net speculator position totaled 119,508 net contracts this week and has been over the +100,000 net contract level in fifteen out of the past seventeen weeks.

Bloomberg Commodity Index

The Bloomberg Commodity Index speculator position comes in as the only other market above 80 percent in the extreme standings this week. The Bloomberg Commodity Index speculator level is now at a 84.3 percent score of its 3-year range.

The speculator position was a total of -6,047 net contracts this week. This market usually has an overall bearish positioning for speculators and this week’s position is near the lowest levels of the past three years.

This Week’s Most Bearish Speculator Positions:

Wheat

The Wheat speculator position comes in as the most bearish extreme standing this week. The Wheat speculator level is at 0.0 percent score or at the absolute bottom of its 3-year range.

The speculator position was -15,766 net contracts this week and the overall position is in bearish territory for the twelfth time out of the past fourteen weeks. Wheat prices continue to be in an uptrend but the speculator sentiment has fallen sharply from earlier in the year.

2-Year Bond

The 2-Year Bond speculator position comes in as the most bearish extreme standing this week as well. The 2-Year Bond speculator level is at the 0.0 percent score of its 3-year range.

The speculator position was a total of -437,785 net contracts this week and hit the most bearish level on record this week as the US Federal Reserve continued to raise its benchmark interest rate.

Gold

The Gold speculator position comes in next for the most bearish extreme standing on the week. The Gold speculator level is at a 4.2 percent score of its 3-year range.

The speculator position was 64,623 net contracts this week and has now been under +100,000 net contracts for eight straight weeks which has not happened since 2018.

5-Year Bond

The 5-Year Bond speculator position comes in as the most bearish extreme standing this week. The 5-Year Bond speculator level is at 4.3 percent score of its 3-year range.

The speculator position was -536,987 net contracts this week and joins all the other bond markets we cover that have negative or bearish net positioning at the moment.

Ultra 10-Year U.S. T-Note

The Ultra 10-Year U.S. T-Note speculator position comes in as the next market in the most bearish extreme standing. The Ultra 10-Year U.S. T-Note speculator level is at a 7.1 percent score of its 3-year range.

The speculator position was -83,431 net contracts this week.

Article By InvestMacro – Receive our weekly COT Newsletter

COT Updates Opinions

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