InvestMacro

Ichimoku Cloud Analysis 25.07.2022 (GBPUSD, BRENT, USDJPY)

GBPUSD, “Great Britain Pound vs US Dollar”

GBPUSD is testing Tenkan-Sen and Kijun-Sen. The instrument is currently moving above Ichimoku Cloud, thus indicating an ascending tendency. The markets could indicate that the price may test the cloud’s upside border at 1.1935 and then resume moving upwards to reach 1.2235. Another signal in favour of a further uptrend will be a rebound from the rising channel’s downside border. However, the bullish scenario may no longer be valid if the price breaks the cloud’s downside border and fixes below 1.1875. In this case, the pair may continue falling towards 1.1685.

BRENT

Brent is falling within the bearish channel. The instrument is currently moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test the cloud’s upside border at 103.05 and then resume moving downwards to reach 92.15. Another signal in favour of a further downtrend will be a rebound from the descending channel’s upside border. However, the bearish scenario may no longer be valid if the price breaks the cloud’s upside border and fixes above 106.05. In this case, the pair may continue growing towards 110.55.

USDJPY, “US Dollar vs Japanese Yen”

USDJPY is rebounding from the support area. The instrument is currently moving below Ichimoku Cloud, thus indicating a descending tendency. The markets could indicate that the price may test Tenkan-Sen at 137.00 and then resume moving upwards to reach 133.70. Another signal in favour of a further downtrend will be a rebound from the rising channel’s downside border. However, the bearish scenario may no longer be valid if the price breaks the cloud’s upside border and fixes above 138.75. In this case, the pair may continue growing towards 139.65.

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

25 Jul

Is the world retracting from globalisation, setting it up for a fifth wave?

By Elsabe Loots, University of Pretoria

– Over the past 25 years there has been lots of research and debate about the concept, the history and state of globalisation, its various dimensions and benefits.

The World Economic Forum has set out the case that the world has experienced four waves of globalisation. In a 2019 publication it summarised them as follows.

The first wave is seen as the period since the late 19th century, boosted by the industrial revolution associated with the improvements in transportation and communication, and ended in 1914. The second wave commenced after WW2 in 1945 and ended in 1989. The third commenced with the fall of the Berlin Wall in 1989 and the disbanding of the former Soviet Union in 1991, and ended with the global financial crises in 2008.

The fourth wave kicked off in 2010 with the recovery of the impact of the global financial crises, the rising of the digital economy, artificial intelligence and, among others, the increasing role of China as a global powerhouse.

More recent debates on the topic focus on whether the world is now experiencing a retraction from the fourth wave and whether it is ready for the take-off of the fifth wave.

The similarities between the retraction period of the first wave and the current global dynamics a century later are startling. But do these similarities mean that a retraction from globalisation is evident? Is there sufficient evidence of de-globalisation or rather “slowbalisation”?

Parallels

The drawn-out retreat from globalisation during the 30-year period – 1914 to 1945 – was characterised by the geopolitical and economic impact of WWI and WWII. Other factors were the 1918-1920 Spanish Flu pandemic ; the Stock Market Crash of 1929 followed by the Great Depression of the 1930s; and the rise of the Communist Bloc under Stalin in the 1940s.

This period was further typified by protectionist sentiments, increases in tariffs and other trade barriers and a general retraction in international trade.

Looking at the current global context, the parallels are remarkable. The world is still fighting the COVID pandemic that had devastating effects on the world economy, global supply chains and people’s lives and well-being.

For its part, the Russia-Ukraine war has caused major global uncertainties and food shortages. It has also led to increases in gas and fuel prices, further disruptions in global value chains and political polarisation.

The increase in the price of various consumer goods and in energy have put pressure on the general price level. World inflation is aggressively on the rise for the first time in 40 years. Monetary authorities worldwide are trying to fight inflation.

Global governance institutions like the World Trade Organisation and the UN, which functioned well in the post-WWII period, now have less influence while the Russian-Ukraine war has split the world politically into three groups. They are the Russian invasion supporters, the neutral countries and those opposing, a group dominated by the US, EU and the UK. This split is contributing to complex geopolitical challenges, which are slowly leading to changes in trade partnerships and regionalism.

Europe is already looking for new suppliers for oil and gas and early indications of the potential expansion of the Chinese influence in Asia are evident.

A less connected world

De-globalisation is seen as

a movement towards a less connected world, characterised by powerful nation states, local solutions and border controls rather than global institutions, treaties, and free movement.

There’s now talk of slowbalisation. The term was first used by trendwatcher and futurologist Adjiedji Bakas in 2015 to describe the phenomenon as the

continued integration of the global economy via trade, financial and other flows, albeit at a significant slower pace.

The data on economic globalisation paint an interesting picture. They show that, even before the COVID pandemic hit the world in 2020, a deceleration in the intensity of globalisation is evident. The data which represent broad measures of globalisation, includes:

World exports of goods and services. As a percentage of world GDP, these reached an all-time high of 31% in 2008 at the end of the third globalisation wave. Exports fell as a percentage of global GDP and only recovered to that level during the early stages of the fourth wave in 2011. Exports then slowly started to regress to 28% of global GDP in 2019 and further to a low of 26% during the first Covid-19 year in 2020.
The volume of foreign direct investment inflows. These reached a peak of US$2 trillion in 2016 before trending lower, reaching US$1.48 trillion in 2019. Although the 2020 foreign direct investment inflows of US$963 billion are a staggering 20% below the 2009 financial crises level, they recovered to US$1.58 billion in 2021.
Foreign direct investment as percentage of GDP started to increase from a mere 1% in 1989 to a peak of 5,3% in 2007. After a retraction following the global financial crises, it peaked again in 2015 and 2016 at around 3,5%. It then declined to 1,7% in 2019 and 1,4% in 2020.
Multinational enterprises have been the major vehicle for economic globalisation over time. The number of them indicates the willingness of companies to invest outside their home countries. In 2008 the UN Conference on Trade and Development reported approximately 82 000. The number declined to 60 000 in 2017.
Data on world private capital flows (including foreign direct investment, portfolio equity flows, remittances and private sector borrowing) are not readily available. However, Organisation for Economic Co-operation and Development data show that private capital flows for reporting countries reached an all-time high of US$414 billion in 2014, followed by a declining trend to US$229 billion in 2019 and a negative outflow of US$8 billion in 2020.

These declining trends are further substantiated by the evidence of deeper fragmentation in economic relations caused by Brexit and the problematic US/China relations, in particular during the Trump era.

What next?

The question now is whether the latest data is:

indicative of either a retraction from globalisation similar to that experienced after the first wave a century ago;
or it is merely a process of de-globalisation;
or slowbalisation in anticipation of the world economy’s recovery from the impact of Covid-19 pandemic and the war in Ukraine?

The similarities between the first wave of globalisation and the existing global events are certainly significant, although embedded in a total different world order.

The current dynamics shaping the world such as the advancement of technology, the digital era and the speed with which technology and information is spread, will certainly influence the intensity of the retraction of the already embedded dependence on globalisation.

Nation states realise that blindly entering into contracts and agreements with companies in other countries, may be problematic and that trade and investment partners need to be chosen carefully. The events over the past three years have certainly shown that economies around the world are deeply integrated and, despite examples of protectionism and threats of more inward-looking policies, it will not be possible to retract in totality.

What may occur is fragmentation where supply chains becoming more regionalised. Nobel prize winning economist Joseph Stiglitz refers to the move to “friend shoring” of production, a phrase coined by US Treasury Secretary Janet Yellen.

It is becoming obvious that the process of globalisation certainly shows characteristics of both de-globalisation and slowbalisation. It’s also clear that the global external shocks require a total rethink, repurpose and reform of the process of globalisation. This will most probably lead the world into the fifth wave of globalisation.

About the Author:

Elsabe Loots, Professor of Economics and former Dean of the Faculty of Economic and Management Sciences, University of Pretoria

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

Economics & Fundamentals Opinions

25 Jul

The Analytical Overview of the Main Currency Pairs on 2022.07.25

By JustForex

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.0226
Prev Close: 1.0215
% chg. over the last day: -0.11%

The European Central Bank joined many other central banks in raising interest rates last week as its focus was on fighting inflation rather than a potential economic slowdown. On Friday, ECB chief Christine Lagarde said that the ECB would raise rates as much as needed to bring inflation back to target levels. By narrowing the interest rate differential, the euro has temporarily strengthened. But it should be noted that the US Federal Reserve will raise interest rates by 0.75-1% this week, which will widen the rates spread, causing the EUR/USD quotes to fall below parity again.

Trading recommendations

Support levels: 1.0181, 1.0106, 1.0035, 1.0000
Resistance levels: 1.0220, 1.0284, 1.0365, 1.0415, 1.050

From the technical point of view, the trend on the EUR/USD currency pair on the hour time frame is bullish. The price is forming a wide balance, and the MACD indicator has become inactive, but the buyers’ pressure remains. Under such market conditions, it is best to look for buy trades on intraday time frames from the support level of 1.0181 or 1.0106, but only with confirmation. Sell trades can be considered from the resistance level of 1.0220 or 1.0284, but only after additional confirmation and with short targets.

Alternative scenario: if the price breaks down through the 1.0000 support level and fixes below, the downtrend will likely resume.

News feed for 2022.07.25:

– Eurozone German Ifo Business Climate (m/m) at 11:00 (GMT+3).

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.1989
Prev Close: 1.2006
% chg. over the last day: -0.15%

Over the past month, the UK Manufacturing PMI has fallen from 52.8 to 52.2, while the service sector PMI has fallen from 54.3 to 53.3. This is weak data for the economy. The closer the index is to level 50, the closer the recession is. Statistically, if the PMI falls below 50, amid falling GDP, officials declare a recession. Volatile energy prices and a tight labor market have already caused Bank of England policymakers to oscillate between aggressively raising interest rates and the need to protect the economy from rising prices. With its open economy and huge current account deficit, the UK remains very vulnerable.

Trading recommendations

Support levels: 1.1964, 1.1907, 1.1803
Resistance levels: 1.2085, 1.2137

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 at the level of the moving averages. The MACD indicator has become inactive. Under such market conditions, it is best to look for buy trades on intraday time frames from the support level of 1.1964 or 1.1907, but only with confirmation. Sell trades can be considered intraday from the resistance level of 1.2085, but only after additional confirmation and with short targets.

Alternative scenario: if the price breaks down through the 1.1803 support level and fixes below, 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: 137.34
Prev Close: 136.06
% chg. over the last day: -0.94%

From the fundamental point of view, nothing has changed on the USD/JPY currency pair, as the Bank of Japan is still keeping its soft monetary policy. At the same time, the US Federal Reserve will raise the rate by another 0.75-1% this week and increase the difference between the US and Japanese rates even more. Even so, Japan’s yen has temporarily strengthened on the back of the dollar, which in turn declined at the end of last week due to the strengthening euro as the ECB raised the interest rate unexpectedly by 0.5%.

Trading recommendations

Support levels: 135.99, 135.40, 134.64, 134.11
Resistance levels: 136.60, 137.26, 137.81, 138.25, 138.56, 140.29

From the technical point of view, the medium-term trend on the USD/JPY currency pair has changed to bearish. The price has consolidated below the moving averages and broke through the priority change level. But it should be understood that this fall is not accompanied by any fundamental factors, so it is still necessary to be cautious when selling. Under such market conditions, buy trades can be searched for intraday from the support level of 135.99, but with additional confirmation. For sell deals, traders can consider the resistance level of 136.60 or 137.26, but only with additional confirmation and short targets.

Alternative scenario: If the price fixes above 138.25, 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: 1.2865
Prev Close: 1.2914
% chg. over the last day: +0.38%

Canadian retail sales data for May increased by 1.6% on Friday, beating expectations of 1.2%. Retail sales excluding cars were also stronger than expected, +1.9% compared to the market forecast of 1.6% (m/m). But the Canadian dollar ended the day lower due to lower oil prices.

Trading recommendations

Support levels: 1.2862, 1.2781
Resistance levels: 1.2934, 1.3006, 1.3085, 1.3154

In terms of technical analysis, the trend on the USD/CAD currency pair is bearish. At the moment, the price is forming a balance and is trading at the levels of the moving lines. The MACD indicator has become inactive. Under such market conditions, it is best to consider sell deals from the resistance level of 1.2934, but with confirmation. Buy trades should be viewed on the lower time frames from the support level of 1.2862, but only with confirmation and short targets.

Alternative scenario: if the price breaks out and consolidates above the 1.3085 resistance level, the uptrend will likely resume.

There is no news feed for today.

By JustForex

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

25 Jul

The Reserve Bank of Australia’s Comments Support AUD

By RoboForex Analytical Department

AUD/USD is balancing at 0.6083 on Monday. The bulls managed to break the descending channel and they stand a good chance of starting a new ascending tendency in the near future.

The RBA Governor is ready to tighten the regulator’s monetary policy by doubling the benchmark interest rate. The reason for this announcement is simple – it’s necessary to push inflation back to its target of 2-3%. Market players tend to respond to such comments, that’s why the AUD got significant support.

The quarterly CPI report is scheduled to be released as early as Wednesday and it is expected to show further growth in inflation, which has already reached its 20-year highs. Another important report, Retail Sales, will be published on Thursday and no positive dynamics are expected here as well. If this indicator is also far below expectations, the risks of a rate-hike by the RBA will increase, helping the AUD to continue its uptrend.

It should be noted that early in the year Philip Lowe wasn’t ready for monetary policy tightening and said that he couldn’t see the rate going up in 2022. However, high inflation forced the regulator to take emergency measures and start raising the rate.

As we can see in the H4 chart, after finishing the first descending impulse at 0.6876, AUD/USD is correcting upwards to reach 0.6925 and may later form another descending impulse towards 0.6886. Later, the market may break the latter level and continue trading within the downtrend with the target at 0.6850, or even extend this structure down to 0.6798. From the technical point of view, this scenario is confirmed by the MACD Oscillator: after leaving the histogram area, its signal line is about to fall and reach 0.

In the H1 chart, having completed the five-wave structure of the first descending impulse at 0.6875, AUD/USD is correcting upwards to reach 0.6925 and may later fall towards 0.6888, thus forming a new consolidation range between the two latter levels. After that, the instrument may break the range to the downside and form a new descending structure with the target at 0.6850. From the technical point of view, this scenario is confirmed by the Stochastic Oscillator: its signal line is moving above 80 and may soon start falling to break 50. Later, it may continue moving down to 20.

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 Jul

Many important economic events will take place this week and volatility in the markets will be high

By JustForex

In the US, weekly jobless claims hit a five-month high, while existing home sales declined for the fifth straight month. These are signs of problems in the labor and housing markets. According to some analysts, the US Federal Reserve may officially announce the beginning of the recession in the United States this week. The US economy is already down 1.6% in the first quarter, and the second quarter is also negative, so, technically, this recession is possible.

At the close of the stock market on Friday, the Dow Jones index (US30) decreased by 0.43% (+1.34% for the week) and the S&P 500 Index (US500) fell by 0.93% (+2.00% for the week). The NASDAQ Technology Index (US100) lost 1.87% on Friday (+2.36% for the week).

It will be a significant week for US stock indices. Besides the important US Federal Reserve meeting on Wednesday and US GDP data on Thursday, technology giants like Amazon (AMZN), Apple (AAPL), Alphabet (GOOG), Meta (META), and Microsoft (MSFT) will report this week as well.

Stock markets in Europe were mostly up on Friday. German DAX (DE30) gained 0.05% (+2.46% for the week), French CAC 40 (FR 40) added 0.25% (+2.42% for the week), Spanish IBEX 35 (ES35) increased by 0.49% (+0.56% for the week), British FTSE 100 (UK100) gained 0.08% (+1.64% for the week).

Last week, the European Central Bank joined many other central banks in raising interest rates as its focus was on fighting inflation rather than a potential economic slowdown. On Friday, ECB chief Christine Lagarde said that the ECB would raise rates as much as needed to bring inflation back to target levels. By narrowing the interest rate differential, the euro has temporarily strengthened. But it should be noted that the US Federal Reserve will raise interest rates by 0.75-1% this week, which will widen the spread again.

US benchmark WTI crude has fallen nearly 3% in the past week, extending its losses over the past three weeks by almost 13%. However, Brent crude jumped by 2.2%, breaking a five-day losing streak of 17%. The situation in the oil market remains very unstable. On the one hand, the White House is trying to lower the price of oil. On the other hand, sanctions against Russia and supply shortage with high demand — these factors do not allow the price to fall.

Last week, precious metal prices rose. “Gold is starting to act as a haven as weakening economic growth will force many central banks to abandon their aggressive tightening plans,” said Ed Moya, head of research US analytical company.

Russia’s war with Ukraine continues. Last week, Russia, Ukraine, Turkey, and UN officials signed an agreement to allow Ukraine to ship grain from a port in Odesa. Despite this, Russian missiles struck the port on Saturday. Russia proved once again that it is a terrorist state. President Vladimir Zelensky, as well as many European officials, condemned Saturday’s attack as “barbarism,” which showed that Moscow could not be trusted under any circumstances.

Asian markets traded lower last week. Japan’s Nikkei 225 (JP225) gained 4.41%, Hong Kong’s Hang Seng (HK50) added 0.63%, and Australia’s S&P/ASX 200 (AU200) increased by 2.81%. At the opening on Monday, the Asian indices are showing a decline. Investors should also pay attention to Inflation Data in Singapore. Analysts forecast consumer price growth to 6.2% (current 5.6%) on an annualized basis. If the data is worse than expected, it may boost the Singapore dollar but at the same time have a negative impact on Asian indices.

In the commodities market, natural gas futures (+18.37%), palladium (+11.05%), platinum (+4.00%), coffee (+2.98%), cotton (+2.75%), copper (+2.74%) and Brent oil (+2.42%) showed the biggest gains over the week. Lumber futures (-10.06%), soybeans (-9.57%), sugar (-7.17%), corn (-6.95%) and wheat (-2.74%) showed the biggest drops.

S&P 500 (F) (US500) 3,961.63 −37.32 (−0.93%)

Dow Jones (US30) 31,899.29 −137.61 (−0.43%)

DAX (DE40) 13,253.68 +7.04 (+0.053%)

FTSE 100 (UK100) 7,276.37 +5.86 (+0.081%)

USD Index 106.55 −0.37 (−0.34%)

Important events for today:

– Singapore Consumer Price Index (m/m) at 08:00 (GMT+3);
– Eurozone German Ifo Business Climate (m/m) at 11:00 (GMT+3).

By JustForex

Economics & Fundamentals Financial News

25 Jul

Trade Of The Week: Can Fed Satisfy Dollar Bulls?

By ForexTime

The phrase “what goes up must eventually come down” springs to mind when looking at the dollar’s performance over the last few days.

We have seen the king of currency space loosen some grip on the FX throne thanks to a combination of profit-taking and reduced bets over how aggressive the Fed will be when raising rates this month. Appetite for the world’s most liquid currency has also been dampened by the improving market mood and recent fall in Treasury yields.

To be fair, the mighty dollar still has a domineering presence and this can be reflected in the month-to-date gains against most G10 currencies. However, the fuel could be running low for dollar bulls with a fresh fundamental spark needed to not only fill up the tank but keep the engines running at maximum speed.

Taking a brief look at the equally weighted dollar index, prices are under pressure on the H4 charts with bears eyeing the 1.1700 support.

After ruling over the FX arena since the start of 2022, are dollar bulls throwing in the towel or just taking a short break? It may be too early to answer this question due to the various fundamental forces at play. However, the dollar’s reaction to the Fed meeting on Wednesday and economic data this week could offer some fresh insight.

The low down…

The dollar got no love last week thanks to the risk-on mood and easing in longer-term inflation expectations.

In mid-July, there was a lot of chatter around the Federal Reserve potentially raising benchmark interest rates by a whopping 100 basis points to tame inflation. The drop in consumer inflation expectations for July trimmed expectations around the Fed making such a move. According to Bloomberg, the probability of a 100-basis point rate hike this month stands at 10%, as of writing.

This development could add more flavour and spice to the upcoming Federal Reserve meeting. The dollar’s weakness to the reduced bets of aggressive hikes continues to highlight how the currency remains highly sensitive to rate hike expectations.

The week ahead…

It’s all about the Federal Reserve meeting on Wednesday.

The central bank is widely to raise interest rates by 75 basis points for a second straight meeting but the main focus will be directed toward Fed Chair Jerome Powell’s post-meeting conference. Given how markets remain highly reactive to anything relating to inflation, interest rates, and growth – Powell’s every word will be closely scrutinized. To prevent any unnecessary fireworks, he is expected to pledge the Fed’s resolve to vanquish inflation while putting growth into consideration.

Interestingly, the U.S economy is holding steady so far and the latest employment numbers look encouraging despite recession fears. However, the inflation picture remains gloomy with consumer prices (CPI), jumping 9.1% in June from a year earlier. On the bright side, the Federal Reserve’s preferred gauge of inflation declined to 4.7% in May.

Possible outcomes to Fed meeting

Fed hikes rates by 75-basis point. This decision may not be enough for dollar bulls since it has already been priced in. Such a move needs to be complemented by a firmly hawkish Powell which fuels speculation around more aggressive hikes down the road.
Fed surprises markets with a 50-basis point hike. A smaller than expected hike is likely to trigger a sharp dollar selloff. If Powell adopts a cautious stance, this will add insult to injury – weakening the dollar further.
Fed fires 100 basis point bazooka. This could send the dollar surging higher in the short term but gains may be surrendered by renewed fears of a US recession.

On the data front, it will be wise to keep an eye out on the latest consumer confidence report for July, US Q2 GDP, weekly jobless claims, and the PCE core deflator among other key economic reports.

Time for USD bears to dominate the scene?

Earlier we spoke about “What goes up must eventually come down”.

Well, this looks like the case with the equally-weighted USD Index on the weekly. After punching above 1.2150 back in mid-July, prices have been on a slippery decline. The weekly bullish trend is under threat with a strong breakdown below the 1.1700 higher low bringing bears into the game.

On the daily charts, prices are trading within a wide range with support at 1.1700 and resistance at 1.1950. There is still some hope for bulls given how the candlesticks are above the 50, 100, and 200-day Simple Moving Average. However, a daily close below 1.1700 could inspire a decline towards 1.1630 and 1.1450, 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

25 Jul

Sri Lanka’s crisis: Can the South Asian economy break from the past and find a route to stability?

By Vidhura S Tennekoon, Indiana University

Sri Lanka has a new president and prime minister – but a change in who leads the crisis-hit South Asian nation alone will not solve the country’s severe economic problems.

Ranil Wickremesinghe – who on July 20, 2022, was voted in by lawmakers to replace fleeing former president Gotabaya Rajapaksa – and his appointed premier Dinesh Gunawardena inherit an economy grappling with record inflation as high as 59%, a currency that has lost almost half its value since March 2022 and severe shortages of daily necessities such as food and fuel. Nearly all economic activity in the country has ground to a halt.

The government’s deficit is so large it can’t afford to pay public workers, and the central bank has almost no foreign currency – needed to finance imports and pay back foreign debt.

In short, Sri Lanka is facing an unprecedented economic crisis, placing tremendous pressure on the new leaders to act fast to fix things.

As an economist and former official at the Central Bank of Sri Lanka, I believe the path forward will be difficult. The country will need to break with past policies and practices that put it in a financial hole while putting in place reforms to get the economy back on track. In particular, there are four key economic challenges the new government will have to address, though they’re all interconnected.

Addressing Sri Lankans’ immediate needs

To avoid the fate of his now exiled predecessor Gotabaya Rajapaksa, President Wickremesinghe will have to address the immediate needs of his people.

After being sworn in, Wickremesinghe said his priority was to ensure that people are able to eat three meals a day.

While food inflation has reached 76%, prices of many basic food items have increased by a higher margin – rice by 160%, wheat flour by 200% and sugar by 164%. To put that in context, a preschool teacher earning minimum wage would need more than a day’s wages to purchase a kilogram (2.2 pounds) of sugar and a kilogram of wheat flour or rice. A cylinder of cooking gas, if they were lucky to find one, would cost more than a half-month’s salary.

Cost of living ranks alongside other pressing issues. Reopening the shuttered schools and universities is another priority. The other urgent need is restoring transportation services. With no fuel to purchase, private bus services are in limbo and public transportation has become an adventure ride, with passengers dangling from the door and windows and even sitting inside the luggage box.

Restoring transportation and electricity services requires foreign currency to import fuel, but support from the International Monetary Fund, which provides financial help to struggling economies through loan packages, is months away. Unless the new president can persuade its regional powerhouses – India and China – to provide more help, economic hardships will continue and life in Sri Lanka will not be normal.

In the past, Sri Lanka has been able to rely on tourism to help bring revenue to the island nation. But this will be impossible while social unrest continues and shortages of essentials limit the country’s ability to serve visitors. Meanwhile, remittances from overseas Sri Lankans have also suffered because of a lack of confidence in the national currency, known as the rupee.

As Wickremesinghe has noted, things will get worse before they get better.

Balancing the budget

The next item on the president’s to-do list will likely be finding a way to bring the budget deficit down. Last year, expenses were 240% of revenue, and 91% more was needed to repay debt. Money printing covered a large portion of this gap but only exacerbated inflation.

The primary reason for Sri Lanka’s current crisis is decades of fiscal mismanagement, with too much spending and too little revenue.

Fixing this problem will require a combination of higher taxes and significant budget cuts. But the budget gap is too wide to eliminate completely the need for money printing. The best that can be hoped for is an aggressive reduction.

Restructuring Sri Lanka’s huge debt

Such budgetary reforms will likely be necessary to solve another challenge Sri Lanka faces: overseas debt.

Sri Lanka has amassed about US$51 billion in foreign debt over the past decades but has virtually no foreign currency with which to pay it back. The government suspended payments on foreign debt in April, sending it into default.

At the end of 2021, about 45% of the debt was owed to private investors, while the rest belonged to countries and multinational institutions. The Asian Development Bank owned the biggest share, at 16%, while Japan, China and the World Bank held 10% apiece.

For Sri Lanka to emerge from its crisis, it will need significant help from the IMF. But the IMF requires assurances that Sri Lanka’s debt sustainability be restored before lending it money.

And other international organizations, such as the World Bank, will not be willing to lend Sri Lanka more until the country signs an agreement with the IMF. And U.S. lawmakers have recently suggested IMF support will be contingent on Sri Lanka’s increasing the independence of its central bank, fighting corruption and doing more to promote the rule of law.

While G-7 countries, the group of leading economies, including Japan, appear willing to help Sri Lanka in its effort to restructure its debt, some bondholders – such as Caribbean-based Hamilton Reserve Bank, which holds just $250 million worth – have already taken legal action to claim their dues.

In May, Sri Lanka took a first step toward restructuring its debt, but it may take several months before the country is able to successfully negotiate with its creditors to ensure debt sustainability.

Garnering public support for reforms

Wickremesinghe’s biggest and most unenviable challenge, however, is less about the economy and more about the politics of fixing it.

He won’t be able to do much about Sri Lanka’s economy until he’s able to bring about political stability. And right now, Sri Lanka remains in turmoil.

Wickremesinghe, who previously served as prime minister appointed by his toppled predecessor, will need a wide mandate and support from opposition politicians if he is to drastically change Sri Lanka’s policies. Upon election, he immediately urged his rivals to join him and “work together to bring the country out of the crisis,” adding, “Our divisions are now over.”

He will also need to address protesters’ demands over reducing executive powers while bringing in strong anti-corruption measures and strengthening democratic institutions.

Yet many doubt Wickremesinghe’s ability to unite Sri Lanka and question his mandate to serve out the remaining term of the presidency. He has been a target of protesters since being appointed president. And a confrontation between armed forces and protesters soon after Wickremesinghe took power doesn’t bode well.

Turning around an economy so deep in crisis will take time. Inflation in Sri Lanka is not believed to have peaked yet, and people will continue to face economic hardships for some time.

But political stability will be needed before Sri Lanka can get out of its economic mess. The fiscal reforms expected by the IMF will be painful and will be viable only with public support, and that of all major political parties in Sri Lanka’s Parliament.

About the Author:

Vidhura S Tennekoon, Assistant Professor of Economics, Indiana University

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

Economics & Fundamentals Financial News

25 Jul

Europe On Sale: Get It While U Can

By Elliott Wave International

On July 13 and 14, the euro and the U.S. dollar briefly traded at parity — for the first time in 20 years.

Just 19 months ago, EURUSD was at $1.2350. It’s quietly dropped 20%+ since.

Quietly? Yeah, because of all the other fireworks in the market drowned out the news.

What would you have done with this knowledge a year and a half ago?

For one thing, you’d have put off that European vacation until now!

Who could have known? EWI subscribers. Check out this forecast from EWI back on January 8, 2021:

It appears that currencies are delivering the early New Year trend reversal that often occurs. The [Euro]’s high at 1.2350 on Wednesday, January 6, completes the five-wave rally from at least November 4, 2020 (1.1604) and likely from March 23, 2020 (1.0635)…Greater bearish potential exists…

Every student of Elliott knows that when five waves finish, you should anticipate a reversal of equal degree.

Here’s what happened since:

Mmmm, I love a good chart.

And a great tweet. Tip of the hat to Mr_Cuddlez!

So, are you ready to catch the next big euro move?

EWI’s Chief Market Analyst Steven Hochberg guides our Financial Forecast Service subscribers 3X/week through the twist and turns in the euro (and dollar) — plus, U.S. stock indexes, bonds, gold and silver — inside his Short Term Update.

Right now, read our forecasts for all of the markets listed above (and more) inside our Financial Forecast Service Test Drive — just $17 for a full week’s access.

Join the Financial Forecast Service Test Drive now.

Hurry: Your one-time Test Drive opportunity ends Thursday, July 28th.

This article was syndicated by Elliott Wave International and was originally published under the headline Europe On Sale: Get It While U Can. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Financial News Forex and Currency News

23 Jul

Euro Currency bets continue to decline while US Dollar Index Speculator positions bounced back

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 July 19th and shows a quick view of how large traders (for-profit speculators and commercial entities) 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

COT currency market speculator bets were mostly higher this week as six out of the eleven currency markets we cover had higher positioning while the other five markets had lower speculator contracts.

Leading the gains for the currency markets was the Canadian dollar (3,162 contracts) and the British pound sterling (1,839 contracts) while the New Zealand dollar (1,612 contracts), the Japanese yen (773 contracts), the US Dollar Index (715 contracts) and the Brazilian real (270 contracts) also had higher speculator bets for the week.

The currencies leading the declines in speculator bets this week were the Euro (-17,501 contracts) and Mexican peso (-7,522 contracts) with the Swiss franc (-2,188 contracts), the Australian dollar (-1,548 contracts) and Bitcoin (-335 contracts) also registering lower bets on the week.

Highlighting the currencies data is the Euro’s continued decline in speculator bets. The Euro’s speculator positioning declined for the third straight week and for the sixth time in the past seven weeks which has taken off a total of -95,017 contracts from the speculator standing in that seven-week period. This decline has quickly taken the Euro speculator contracts from +52,272 contracts on May 31st to a total of -42,745 contracts this week. The EURUSD’s spot price this week had a modest bounce-back following a three-week decline and a dip below parity with the US Dollar last week. The EURUSD currency pair closed the week near the 1.0215 spot exchange rate after gaining by approximately 1.25 percent for the week.

The US Dollar Index speculator bets, meanwhile, rose this week for the first time in the past four weeks and remain near the top of their speculative range. Dollar speculators had taken a total of -6,656 contracts off the bullish position in the previous three weeks and pulled the net bullish position below +40,000 contracts for the first time since June 28th before this week’s small rebound. Speculators have been uber-bullish recently on the dollar and the past four months has seen a strong surge to the upside. Since April, the US Dollar Index price has been higher in twelve out of fifteen weeks and culminated with the highest DXY price in approximately twenty years above 109.00. The dollar strength has been punishing the other major currencies as the Euro and Yen have hit multi-decade lows (versus the USD) with the US Federal Reserve sharply raising interest rates to combat inflation. The Dollar Index spot price cooled off this week by approximately 1.30 percent and closed around the 106.50 exchange rate.

Data Snapshot of Forex Market Traders | Columns Legend

Jul-19-2022	OI	OI-Index	Spec-Net	Spec-Index	Com-Net	COM-Index	Smalls-Net	Smalls-Index
USD Index	59,214	87	39,069	90	-41,500	10	2,431	43
EUR	694,106	80	-42,745	22	17,430	81	25,315	16
GBP	228,051	56	-57,250	33	70,299	71	-13,049	29
JPY	229,449	75	-59,225	32	73,082	71	-13,857	25
CHF	41,855	25	-10,912	29	19,205	74	-8,293	29
CAD	142,216	25	6,667	47	-8,746	61	2,079	34
AUD	155,246	49	-43,148	45	49,276	56	-6,128	37
NZD	45,467	35	-3,671	65	7,227	42	-3,556	11
MXN	196,123	47	-30,760	14	27,890	84	2,870	55
RUB	20,930	4	7,543	31	-7,150	69	-393	24
BRL	42,452	30	10,475	61	-11,580	40	1,105	78
Bitcoin	14,512	84	-506	71	-66	0	572	26

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) show that the US Dollar Index (90.1 percent) leads the currency markets once again and remains in a bullish extreme position. Bitcoin (71.1 percent), the New Zealand Dollar (65.1 percent) and the Brazilian Real (60.7 percent) come in as the next highest in strength scores – also for a second straight week. On the downside, the Mexican Peso (14.2 percent) remains the currency with the lowest strength level currently and is followed by the EuroFX (21.9 percent) which is quickly getting more bearish by the week.

Strength Statistics:
US Dollar Index (90.1 percent) vs US Dollar Index previous week (88.9 percent)
EuroFX (21.9 percent) vs EuroFX previous week (27.3 percent)
British Pound Sterling (32.8 percent) vs British Pound Sterling previous week (31.4 percent)
Japanese Yen (32.4 percent) vs Japanese Yen previous week (31.9 percent)
Swiss Franc (28.8 percent) vs Swiss Franc previous week (34.4 percent)
Canadian Dollar (46.8 percent) vs Canadian Dollar previous week (43.3 percent)
Australian Dollar (44.8 percent) vs Australian Dollar previous week (46.3 percent)
New Zealand Dollar (65.1 percent) vs New Zealand Dollar previous week (62.4 percent)
Mexican Peso (14.2 percent) vs Mexican Peso previous week (17.4 percent)
Brazil Real (60.7 percent) vs Brazil Real previous week (60.4 percent)
Russian Ruble (31.2 percent) vs Russian Ruble previous week (31.9 percent)
Bitcoin (71.1 percent) vs Bitcoin previous week (77.2 percent)

Strength Trends

Strength Score Trends (or move index, calculates the 6-week changes in strength scores) show that the New Zealand Dollar (27.0 percent) leads the past six weeks trends for the currency markets this week. The Japanese Yen (20.0 percent) and the Swiss Franc (13.2 percent) fill out the top movers in the trends data. The Brazilian Real (-35.6 percent) leads the downside trend scores currently while the next markets with lower trend scores were the EuroFX (-28.6 percent) followed by the Mexican Peso (-27.1 percent).

Strength Trend Statistics:
US Dollar Index (1.9 percent) vs US Dollar Index previous week (1.4 percent)
EuroFX (-28.6 percent) vs EuroFX previous week (-23.8 percent)
British Pound Sterling (9.8 percent) vs British Pound Sterling previous week (10.8 percent)
Japanese Yen (20.0 percent) vs Japanese Yen previous week (21.2 percent)
Swiss Franc (13.2 percent) vs Swiss Franc previous week (29.7 percent)
Canadian Dollar (8.7 percent) vs Canadian Dollar previous week (11.8 percent)
Australian Dollar (4.4 percent) vs Australian Dollar previous week (6.6 percent)
New Zealand Dollar (27.0 percent) vs New Zealand Dollar previous week (22.6 percent)
Mexican Peso (-27.1 percent) vs Mexican Peso previous week (-25.0 percent)
Brazil Real (-35.6 percent) vs Brazil Real previous week (-34.5 percent)
Russian Ruble (-15.6 percent) vs Russian Ruble previous week (9.1 percent)
Bitcoin (-18.1 percent) vs Bitcoin previous week (-10.4 percent)

Individual Market Charts:

US Dollar Index Futures:

The US Dollar Index large speculator standing this week rose to a net position of 39,069 contracts in the data reported through Tuesday. This was a weekly advance by 715 contracts from the previous week which had a total of 38,354 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 90.1 percent. The commercials are Bearish-Extreme with a score of 9.9 percent and the small traders (not shown in chart) are Bearish with a score of 43.1 percent.

US DOLLAR INDEX Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	84.8	4.9	8.6
– Percent of Open Interest Shorts:	18.9	74.9	4.5
– Net Position:	39,069	-41,500	2,431
– Gross Longs:	50,234	2,873	5,069
– Gross Shorts:	11,165	44,373	2,638
– Long to Short Ratio:	4.5 to 1	0.1 to 1	1.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	90.1	9.9	43.1
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	1.9	0.6	-16.3

Euro Currency Futures:

The Euro Currency large speculator standing this week was a net position of -42,745 contracts in the data reported through Tuesday. This was a sharp weekly drop of -17,501 contracts from the previous week which had a total of -25,244 net contracts.

The 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 21.9 percent. The commercials are Bullish-Extreme with a score of 81.0 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 16.3 percent.

EURO Currency Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	28.2	57.3	11.9
– Percent of Open Interest Shorts:	34.4	54.8	8.3
– Net Position:	-42,745	17,430	25,315
– Gross Longs:	195,875	397,991	82,676
– Gross Shorts:	238,620	380,561	57,361
– Long to Short Ratio:	0.8 to 1	1.0 to 1	1.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	21.9	81.0	16.3
– Strength Index Reading (3 Year Range):	Bearish	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-28.6	30.0	-20.4

British Pound Sterling Futures:

The British Pound Sterling large speculator standing this week totaled a net position of -57,250 contracts in the data reported through Tuesday. This was a weekly gain of 1,839 contracts from last week’s total of -59,089 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 32.8 percent. The commercials are Bullish with a score of 71.3 percent and the small traders (not shown in chart) are Bearish with a score of 28.6 percent.

BRITISH POUND Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	14.0	74.6	8.7
– Percent of Open Interest Shorts:	39.1	43.7	14.4
– Net Position:	-57,250	70,299	-13,049
– Gross Longs:	31,943	170,053	19,882
– Gross Shorts:	89,193	99,754	32,931
– Long to Short Ratio:	0.4 to 1	1.7 to 1	0.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	32.8	71.3	28.6
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	9.8	-6.0	-7.0

Japanese Yen Futures:

The Japanese Yen large speculator standing this week was a net position of -59,225 contracts in the data reported through Tuesday. This was a weekly rise of 773 contracts from the previous week which had a total of -59,998 net contracts.

The current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 32.4 percent. The commercials are Bullish with a score of 71.3 percent and the small traders (not shown in chart) are Bearish with a score of 25.3 percent.

JAPANESE YEN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	18.7	69.0	10.7
– Percent of Open Interest Shorts:	44.5	37.2	16.7
– Net Position:	-59,225	73,082	-13,857
– Gross Longs:	42,880	158,427	24,496
– Gross Shorts:	102,105	85,345	38,353
– Long to Short Ratio:	0.4 to 1	1.9 to 1	0.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	32.4	71.3	25.3
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	20.0	-17.6	7.3

Swiss Franc Futures:

The Swiss Franc large speculator standing this week totaled a net position of -10,912 contracts in the data reported through Tuesday. This was a weekly decline of -2,188 contracts from the previous week which had a total of -8,724 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 28.8 percent. The commercials are Bullish with a score of 74.1 percent and the small traders (not shown in chart) are Bearish with a score of 29.5 percent.

SWISS FRANC Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	16.6	59.7	23.5
– Percent of Open Interest Shorts:	42.7	13.9	43.3
– Net Position:	-10,912	19,205	-8,293
– Gross Longs:	6,948	25,008	9,819
– Gross Shorts:	17,860	5,803	18,112
– Long to Short Ratio:	0.4 to 1	4.3 to 1	0.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	28.8	74.1	29.5
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	13.2	-12.8	9.5

Canadian Dollar Futures:

The Canadian Dollar large speculator standing this week was a net position of 6,667 contracts in the data reported through Tuesday. This was a weekly gain of 3,162 contracts from the previous week which had a total of 3,505 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 46.8 percent. The commercials are Bullish with a score of 61.4 percent and the small traders (not shown in chart) are Bearish with a score of 34.3 percent.

CANADIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	29.6	47.1	22.1
– Percent of Open Interest Shorts:	24.9	53.3	20.6
– Net Position:	6,667	-8,746	2,079
– Gross Longs:	42,040	67,038	31,391
– Gross Shorts:	35,373	75,784	29,312
– Long to Short Ratio:	1.2 to 1	0.9 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	46.8	61.4	34.3
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	8.7	3.9	-24.9

Australian Dollar Futures:

The Australian Dollar large speculator standing this week was a net position of -43,148 contracts in the data reported through Tuesday. This was a weekly lowering of -1,548 contracts from the previous week which had a total of -41,600 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 44.8 percent. The commercials are Bullish with a score of 55.6 percent and the small traders (not shown in chart) are Bearish with a score of 37.5 percent.

AUSTRALIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	19.7	66.0	11.2
– Percent of Open Interest Shorts:	47.5	34.3	15.2
– Net Position:	-43,148	49,276	-6,128
– Gross Longs:	30,578	102,518	17,420
– Gross Shorts:	73,726	53,242	23,548
– Long to Short Ratio:	0.4 to 1	1.9 to 1	0.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	44.8	55.6	37.5
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	4.4	1.4	-16.1

New Zealand Dollar Futures:

The New Zealand Dollar large speculator standing this week was a net position of -3,671 contracts in the data reported through Tuesday. This was a weekly increase of 1,612 contracts from the previous week which had a total of -5,283 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 65.1 percent. The commercials are Bearish with a score of 41.5 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 10.8 percent.

NEW ZEALAND DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	34.7	59.2	5.4
– Percent of Open Interest Shorts:	42.8	43.3	13.2
– Net Position:	-3,671	7,227	-3,556
– Gross Longs:	15,791	26,905	2,444
– Gross Shorts:	19,462	19,678	6,000
– Long to Short Ratio:	0.8 to 1	1.4 to 1	0.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	65.1	41.5	10.8
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	27.0	-23.8	-7.4

Mexican Peso Futures:

The Mexican Peso large speculator standing this week was a net position of -30,760 contracts in the data reported through Tuesday. This was a weekly decrease of -7,522 contracts from the previous week which had a total of -23,238 net contracts.

The current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 14.2 percent. The commercials are Bullish-Extreme with a score of 84.4 percent and the small traders (not shown in chart) are Bullish with a score of 55.2 percent.

MEXICAN PESO Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	50.0	46.6	3.0
– Percent of Open Interest Shorts:	65.6	32.4	1.6
– Net Position:	-30,760	27,890	2,870
– Gross Longs:	97,965	91,458	5,972
– Gross Shorts:	128,725	63,568	3,102
– Long to Short Ratio:	0.8 to 1	1.4 to 1	1.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	14.2	84.4	55.2
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-27.1	27.5	-10.7

Brazilian Real Futures:

The Brazilian Real large speculator standing this week reached a net position of 10,475 contracts in the data reported through Tuesday. This was a weekly advance of 270 contracts from the previous week which had a total of 10,205 net contracts.

The 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 40.0 percent and the small traders (not shown in chart) are Bullish with a score of 77.7 percent.

BRAZIL REAL Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	48.5	43.7	7.3
– Percent of Open Interest Shorts:	23.9	71.0	4.7
– Net Position:	10,475	-11,580	1,105
– Gross Longs:	20,600	18,569	3,092
– Gross Shorts:	10,125	30,149	1,987
– Long to Short Ratio:	2.0 to 1	0.6 to 1	1.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	60.7	40.0	77.7
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-35.6	36.5	-13.4

Bitcoin Futures:

The Bitcoin large speculator standing this week was a net position of -506 contracts in the data reported through Tuesday. This was a weekly decline of -335 contracts from the previous week which had a total of -171 net contracts.

The 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 71.1 percent. The commercials are Bullish with a score of 53.9 percent and the small traders (not shown in chart) are Bearish with a score of 25.9 percent.

BITCOIN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	75.2	3.5	9.4
– Percent of Open Interest Shorts:	78.7	4.0	5.4
– Net Position:	-506	-66	572
– Gross Longs:	10,909	514	1,360
– Gross Shorts:	11,415	580	788
– Long to Short Ratio:	1.0 to 1	0.9 to 1	1.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	71.1	53.9	25.9
– Strength Index Reading (3 Year Range):	Bullish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-18.1	26.9	12.1

Article By InvestMacro – Receive our weekly COT Reports by Email

*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.

CountingPips Forex Blog Forex and Currency News investing Opinions

23 Jul

COT Week 29 Charts: Precious Metals Speculator bets continue weakness led by Gold & Silver

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 July 19th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets.

Weekly Speculator Changes

COT precious metals speculator bets were lower this week as two out of the five metals markets we cover had higher positioning this week while the other three markets had lower speculator contracts.

Leading the gains for the precious metals markets was Copper (2,459 contracts) with Platinum (1,629 contracts) also showing a positive week.

The metals markets leading the declines in speculator bets this week were Gold (-23,166 contracts) and XX with Silver (-1,844 contracts) and Palladium (-949 contracts) also registering lower bets on the week.

Highlighting the metals data this week is the continued decline in speculator bets for Gold. Positioning has been down for four straight weeks and in five out of the past six weeks, taking a total of -80,313 contracts off the bullish position in the past six weeks. This weakness has dropped the Gold bullish position to below the +100,000 net contract level for the first time since May 28th of 2019, a span of 164 weeks. Gold prices, meanwhile, have shaved off about $300 from the highs in March but have recently found support near the $1,700 price-point.

Silver positions have been falling in a similar fashion and have now declined for the past four straight weeks. Positioning has also been lower in eleven out of the past thirteen weeks with a total drop of -45,069 contracts over that time-frame. The current speculator standing is at just +1,360 contracts and is dangerously close to going negative for the first time since June of 2019. Silver spot prices in the past two weeks have dipped to the lowest levels since July of 2020 right near the major price level of $18.

Data Snapshot of Commodity Market Traders | Columns Legend

Jul-19-2022	OI	OI-Index	Spec-Net	Spec-Index	Com-Net	COM-Index	Smalls-Net	Smalls-Index
WTI Crude	1,577,616	0	271,091	1	-293,689	100	22,598	47
Gold	524,786	21	94,955	0	-112,262	100	17,307	0
Silver	145,247	12	1,360	0	-8,213	100	6,853	2
Copper	174,592	8	-23,836	25	23,745	76	91	26
Palladium	6,915	3	-3,751	2	4,302	99	-551	12
Platinum	75,069	47	-4,282	2	-273	98	4,555	26
Natural Gas	953,325	0	-120,323	42	86,699	58	33,624	60
Brent	177,889	22	-41,302	42	40,843	61	459	15
Heating Oil	267,576	22	9,243	56	-23,800	46	14,557	49
Soybeans	602,987	0	102,593	45	-74,427	61	-28,166	23
Corn	1,308,458	0	209,940	57	-165,611	48	-44,329	18
Coffee	196,041	3	27,979	63	-28,026	44	47	0
Sugar	703,614	0	127,162	63	-141,842	41	14,680	26
Wheat	292,700	2	6,522	28	3,173	64	-9,695	60

Strength Scores

Strength scores (a measure of the 3-Year range of Speculator positions, from 0 to 100 where above 80 is extreme bullish and below 20 is extreme bearish) show that Copper (25.2 percent) leads the metals again this week but is itself in a very weak position (just above the 20 percent extreme bearish level). All the other metals markets are in extreme bearish levels as has been the case for multiple weeks. Platinum (2.2 percent), Palladium (1.7 percent), Gold (0.0 percent) and Silver (0.0 percent) round out the rest of the strength scores.

Strength Statistics:
Gold (0.0 percent) vs Gold previous week (9.0 percent)
Silver (0.0 percent) vs Silver previous week (2.4 percent)
Copper (25.2 percent) vs Copper previous week (23.4 percent)
Platinum (2.2 percent) vs Platinum previous week (0.0 percent)
Palladium (1.7 percent) vs Palladium previous week (7.1 percent)

Strength Trends

Strength Score Trends (or move index, calculates the 6-week changes in strength scores) illustrate how weak the metals category has been as all the metals have negative strength trends over the past six weeks. Gold (-31.0 percent) leads the downside trend scores currently while the next markets with lower trend scores were Silver (-21.0 percent) followed by Copper (-14.5 percent), Platinum (-13.9 percent) and Palladium (-1.6 percent).

Move Statistics:
Gold (-31.0 percent) vs Gold previous week (-21.1 percent)
Silver (-21.0 percent) vs Silver previous week (-14.1 percent)
Copper (-14.5 percent) vs Copper previous week (-6.0 percent)
Platinum (-13.9 percent) vs Platinum previous week (-11.3 percent)
Palladium (-1.6 percent) vs Palladium previous week (1.9 percent)

Individual Markets:

Gold Comex Futures:

The Gold Comex Futures large speculator standing this week equaled a net position of 94,955 contracts in the data reported through Tuesday. This was a weekly lowering of -23,166 contracts from the previous week which had a total of 118,121 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 0.0 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 0.0 percent.

Gold Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	45.9	29.0	8.2
– Percent of Open Interest Shorts:	27.8	50.4	5.0
– Net Position:	94,955	-112,262	17,307
– Gross Longs:	241,004	152,103	43,294
– Gross Shorts:	146,049	264,365	25,987
– Long to Short Ratio:	1.7 to 1	0.6 to 1	1.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	0.0	100.0	0.0
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-31.0	32.1	-24.0

Silver Comex Futures:

The Silver Comex Futures large speculator standing this week equaled a net position of 1,360 contracts in the data reported through Tuesday. This was a weekly reduction of -1,844 contracts from the previous week which had a total of 3,204 net contracts.

Silver Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	38.7	40.2	14.8
– Percent of Open Interest Shorts:	37.7	45.9	10.1
– Net Position:	1,360	-8,213	6,853
– Gross Longs:	56,187	58,430	21,517
– Gross Shorts:	54,827	66,643	14,664
– Long to Short Ratio:	1.0 to 1	0.9 to 1	1.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	0.0	100.0	2.2
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-21.0	21.4	-18.1

Copper Grade #1 Futures:

The Copper Grade #1 Futures large speculator standing this week equaled a net position of -23,836 contracts in the data reported through Tuesday. This was a weekly lift of 2,459 contracts from the previous week which had a total of -26,295 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 25.2 percent. The commercials are Bullish with a score of 75.8 percent and the small traders (not shown in chart) are Bearish with a score of 25.8 percent.

Copper Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	29.8	49.5	8.4
– Percent of Open Interest Shorts:	43.4	35.9	8.3
– Net Position:	-23,836	23,745	91
– Gross Longs:	52,000	86,505	14,616
– Gross Shorts:	75,836	62,760	14,525
– Long to Short Ratio:	0.7 to 1	1.4 to 1	1.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	25.2	75.8	25.8
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-14.5	15.7	-15.9

Platinum Futures:

The Platinum Futures large speculator standing this week equaled a net position of -4,282 contracts in the data reported through Tuesday. This was a weekly advance of 1,629 contracts from the previous week which had a total of -5,911 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 2.2 percent. The commercials are Bullish-Extreme with a score of 98.1 percent and the small traders (not shown in chart) are Bearish with a score of 25.5 percent.

Platinum Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	43.9	37.7	11.0
– Percent of Open Interest Shorts:	49.6	38.1	4.9
– Net Position:	-4,282	-273	4,555
– Gross Longs:	32,960	28,338	8,241
– Gross Shorts:	37,242	28,611	3,686
– Long to Short Ratio:	0.9 to 1	1.0 to 1	2.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	2.2	98.1	25.5
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-13.9	12.2	10.4

Palladium Futures:

The Palladium Futures large speculator standing this week equaled a net position of -3,751 contracts in the data reported through Tuesday. This was a weekly lowering of -949 contracts from the previous week which had a total of -2,802 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 1.7 percent. The commercials are Bullish-Extreme with a score of 98.8 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 12.0 percent.

Palladium Futures Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	9.8	76.5	12.7
– Percent of Open Interest Shorts:	64.0	14.3	20.6
– Net Position:	-3,751	4,302	-551
– Gross Longs:	676	5,288	875
– Gross Shorts:	4,427	986	1,426
– Long to Short Ratio:	0.2 to 1	5.4 to 1	0.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	1.7	98.8	12.0
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-1.6	4.0	-24.9

Article By InvestMacro – Receive our weekly COT Reports by Email

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