InvestMacro

EUR/USD Hits Four-Year High: All Eyes on the Fed

The EUR/USD pair surged to 1.1854 USD on Wednesday, reaching its highest level since September 2021. Investors are positioning ahead of the Federal Reserve’s highly anticipated interest rate decision, due later today.

Markets are almost fully pricing in a 25-basis-point cut, with 67 basis points of cumulative easing expected by year-end. These expectations are reinforced by recent labour market softening, despite inflation remaining above the Fed’s 2% target.

Significant attention will also be focused on the updated quarterly dot plot, which may offer critical insights into the future path of monetary policy.

The trading session is expected to be highly volatile.

On the data front, US retail sales rose in August for the third consecutive month, underscoring the resilience of consumer spending over the summer.

Broad-based USD weakness has driven the dollar lower against nearly all major currencies.

Technical Analysis: EUR/USD

H4 Chart:

On the H4 chart, EUR/USD formed a consolidation range around 1.1762 USD before breaking upward to complete an impulsive move to 1.1877 USD. The pair now appears poised for a corrective decline towards 1.1762 USD. This outlook is supported by the MACD indicator: although the signal line remains above zero, it has reached overextended levels. This suggests that a near-term pullback is likely.

H1 Chart:

On the H1 chart, the pair completed its ascent to 1.1877 USD and is now forming a consolidation range below this level. A downward breakout is expected, with an initial decline towards 1.1762 USD likely. A brief rebound towards 1.1820 USD may follow. Selling pressure could then resume, with targets at 1.1630 USD and potentially 1.1550 USD. The Stochastic oscillator confirms this bearish near-term bias, with its signal line positioned below 50 and trending downward towards 20.

Conclusion

The euro’s rally to multi-year highs reflects broad USD weakness and elevated expectations for Fed easing. However, technical indicators suggest the pair is overextended and due for a correction. Today’s Fed decision – particularly the tone of the statement and updated dot plot – will be crucial in determining whether this pullback deepens or becomes a buying opportunity. Traders should prepare for significant volatility following the release.

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

16 Sep

Fed, under pressure to cut rates, tries to balance labor market and inflation – while avoiding dreaded stagflation

By Jason Reed, University of Notre Dame

The Federal Reserve is in a nearly impossible spot right now.

Markets are expecting a quarter-point interest rate cut to a range of 4% to 4.25% when the Fed policy-setting committee concludes its latest meeting on Sept. 17, 2025. After all, the slowdown in the jobs market, as well as a massive revision to past figures showing close to a million fewer jobs were created than previously reported, makes a strong case for lower interest rates to shore up the economy.

But at the same time, inflation – the other component of the Fed’s dual mandate – has begun to accelerate again. As rising tariffs squeeze consumer spending in sectors exposed to the harshest tariffs – such as clothing and electronics – other inflationary pressures loom over the horizon.

A slowing economy or rising inflation is a circumstance that policymakers want to avoid. But as an economist and finance professor, I’m increasingly concerned about the risk that they happen at the same time – a horrible economic condition known as stagflation – and that the Fed may be too slow in responding.

Between a rock and a hard data point

The Fed has been under pressure to cut rates for some time – including from President Donald Trump.

The reason markets and the White House are so interested is because what the Fed does matters. The central bank’s decision at its near-monthly meetings helps banks and other lenders to determine rates on auto loans, mortgages, credit cards and more. Lower rates usually lead more businesses and consumers to borrow and spend more, boosting economic activity. This also can drive up inflation.

For the better part of three years, the central bank has been focused on its generational fight against inflation. But now, with inflation down significantly from its 40-year high of 9% reached in 2022 and the jobs market sputtering, conditions finally seemed right to resume cutting rates.

The labor market has seen continued deterioration, most notably with the Bureau of Labor Statistics’ revisions to nonfarm payrolls – in effect reducing the number of jobs economists thought the U.S. gained by almost 1 million for the year ending in March 2025.

But a recent uptick in inflation has made the Fed’s call more complicated.

Over the past four months, the consumer price index has consistently ticked up, with the most recent CPI figure indicating year-over-year inflation of 2.9% – well above the Fed’s target of 2%.

Switching focus to jobs

At the Fed’s last meeting in August, Chair Jerome Powell said that the risks to the labor market now exceed the risks of inflation.

For example, for the first time since 2021, the number of unemployed people have outpaced job vacancies as companies have moved to eliminate open positions before laying off workers.

Most compelling is the so-called U6 unemployment rate – which includes those in the regular unemployment figures and people who have stopped looking for jobs, as well as those who are working part time but are looking for full-time opportunities. That has increased over the past three months to 8.1%.

The evidence suggests that businesses are reluctant to add workers as tariff policy and broad economic uncertainty appear to drive hiring decisions.

The worst of both worlds

The short-term risk here is that a quarter-point cut won’t be enough to shore up the jobs market, and it may be too late to prevent the economy from tipping into recession.

The longer-term risk is more concerning: Not only could the economy contract, but it could do so while inflation accelerates.

The last time the U.S. experienced stagflation was in the 1970s, when an oil embargo caused the price of crude to double. This drove up inflation while causing unemployment to soar and the economy to stall. Policies aimed at reducing inflation typically exacerbate slowing growth, and vice versa. In other words, there were fewer dollars to go around – and those dollars were worth a little less every day.

The pain experienced during this previous bout of stagflation convinced a generation of economists and policymakers that the condition was to be avoided at all costs.

The Fed, which has consistently shown its hand and has guided the markets toward this week’s rate cut, now has to make what seems like an impossible decision: cut rates even if doing so will add inflationary pressures.

And there are other potential headwinds for the U.S. economy. For example, it has yet to fully absorb the impact of Trump’s immigration crackdown on productivity and output due to the loss of workers. Waning consumer confidence suggests consumer spending could soon drop. And a potential federal government shutdown looms in September.

In my view, it’s clear that a cut is warranted. But will it drive up inflation? Economists like me will be watching this closely.

About the Author:

Jason Reed, Associate Teaching Professor of Finance, University of Notre Dame

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

Economics & Fundamentals Opinions

16 Sep

Even professional economists can’t escape political bias

By Aeimit Lakdawala, Wake Forest University

Republican-leaning economists tend to predict stronger economic growth when a Republican is president than Democrats do – and because of this partisan optimism, their forecasts end up being less accurate.

I’m an economist, and my colleagues and I found this by analyzing nearly 40 years of responses to The Wall Street Journal’s Economic Forecasting Survey. Unlike most such surveys, the Journal publishes each forecaster’s name, allowing us to link their predictions to their political affiliations.

The respondents were professional economists at major banks, consulting firms and universities whose forecasts help guide financial markets and business decisions. Out of more than 300 economists in our sample, we could identify the political affiliations of 122. We did this by looking at the forecasters’ political donation records, voter registration data and work histories with partisan groups.

The pattern was striking: Republican forecasters systematically predicted higher gross domestic product growth when their party controlled the presidency, representing roughly 10% to 15% of average growth rates during our study period.

When we examined forecast accuracy using real-time GDP data, Republican forecasters made larger errors when their preferred party held office. This suggests partisan optimism makes their professional judgment worse.

What makes this finding particularly notable is its asymmetry. The partisan gap emerged specifically during Republican presidencies. Under Democratic Presidents Bill Clinton, Barack Obama and Joe Biden, Republican and Democratic forecasters made virtually identical predictions. That wasn’t the case when George W. Bush, and later Donald Trump, occupied the White House.

Interestingly, this bias appears only in GDP forecasts. When we analyzed predictions for inflation, unemployment and interest rates, we found no systematic differences between Republican and Democratic forecasters.

That makes sense, because GDP forecasts are inherently more uncertain than other economic predictions. Professional forecasters tend to disagree more and make more mistakes when predicting GDP compared to inflation or unemployment rates. This creates opportunities for partisan ideologies to sneak in.

We traced the bias to different views about the effectiveness of tax policies. Using Google Trends data to measure when tax cuts were in the news, we found Republican forecasters become systematically more optimistic precisely when tax policy discussions heat up.

Why it matters

Previous research has found that most people have a strong partisan bias when they make economic predictions. Our work is the first to show that professional economists can also succumb to such influences – despite their training and market incentives to be accurate.

Their errors can come at a high price. Financial markets, policymakers and businesses rely on economists’ forecasts to make major decisions. When the Federal Reserve sets interest rates, when companies plan investments and when investors allocate portfolios, they often reference these professional consensus forecasts.

Our research challenges a common assumption in economics: that aggregating diverse expert forecasts eliminates individual biases and improves accuracy.

This doesn’t mean professional forecasters are incompetent or dishonest. These are highly trained economists with strong financial incentives for accuracy. Rather, our findings reveal how even experts with the best intentions can be unconsciously influenced by their own ideological beliefs – especially when dealing with inherently uncertain data.

What still isn’t known

Several important questions remain unanswered. It’s unclear how this bias might be reduced. Would making forecasters more aware of their political leanings help reduce the effect? Or would developing new forecasting methods that weight predictions based on historical accuracy during different political regimes improve consensus forecasts?

We’re also curious whether institutional factors matter. Might forecasters at institutions with explicit political diversity policies show less bias? How do international forecasters viewing the U.S. economy compare to domestic ones?

Finally, our research focuses on U.S. forecasters during a period of increasing political polarization. Whether similar patterns emerge in other countries with different political systems, or during less polarized times, remains an open question.

The Research Brief is a short take on interesting academic work.

About the Author:

Aeimit Lakdawala, Associate Professor of Economics, Wake Forest University

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

Economics & Fundamentals Opinions

16 Sep

USD/JPY Declines: Yen Gains Safe-Haven Appeal

By RoboForex Analytical Department

The USD/JPY pair fell for a second consecutive session on Tuesday, with the Japanese yen strengthening to around 147.19 JPY per US dollar. The move reflects broad-based USD weakness and growing expectations of imminent Federal Reserve rate cuts.

Markets are now pricing in a 25-basis-point cut from the Fed this week, with a total of 67 basis points’ easing anticipated through the remainder of the year. These expectations are reinforced by recent data pointing to a cooling labour market and moderating inflation.

The Bank of Japan is also set to meet this week and is widely expected to hold rates steady at 0.5%. Meanwhile, policymakers will need to evaluate the potential impact of US tariff policies on Japan’s export-dependent economy.

Upcoming economic releases are likely to show continued softness: both exports and imports are forecast to remain weak, while core CPI is expected to slow to 2.7% – the lowest level since November 2024.

Amid elevated global volatility, the yen is demonstrating relative strength, underscoring its role as a safe-haven asset.

Technical Analysis: USD/JPY

H4 Chart:

On the H4 chart, USD/JPY continues to trade within a consolidation range centred around 147.33 JPY, with recent extensions towards 148.14 JPY on the upside and 146.90 JPY on the downside. A further decline towards 146.30 JPY is possible. Should this level be reached, a corrective bounce towards 147.33 JPY may occur before another leg down towards 145.30 JPY. The MACD indicator supports this bearish outlook, with its signal line positioned below zero and pointing firmly downward.

H1 Chart:

On the H1 chart, the pair is following a clear downward move structure towards 146.76 JPY. The market has broken below its recent consolidation range, confirming the bearish momentum. Further declines towards 146.76 JPY are expected, with an extension towards 144.44 JPY likely. The Stochastic oscillator aligns with this view, as its signal line remains below 50 and is trending downward towards 20, reflecting strengthening selling pressure.

Conclusion

The yen is strengthening amid broad USD softness and safe-haven demand, with all eyes on this week’s Fed and BoJ meetings. While the BoJ is likely to remain on hold, the Fed’s dovish shift could further weigh on USD/JPY in the near term. Technically, the pair exhibits clear bearish momentum, with key support levels in focus. A break below 146.30 JPY may accelerate the decline towards deeper supports.

Disclaimer:

Financial News Forex and Currency News

16 Sep

The tech-heavy Nasdaq Index is breaking price records again. In Thailand, there are plans to introduce a tax on gold trading in baht

By JustMarkets

On Monday, the Dow Jones (US30) Index rose by 0.11%, the S&P 500 (US500) gained 0.47%, and the tech-heavy Nasdaq (US100) closed up 0.94%, setting an all-time high. The US stocks closed higher, driven by a surge in technology shares. Tesla jumped by 3.6% after CEO Elon Musk reported purchasing about $1 billion in stock, his largest open-market purchase ever, while Alphabet gained 4.3%, reaching a $3 trillion valuation and boosting the communication services sector. Nvidia ended the session flat, paring losses after a Chinese regulator stated the company had violated antitrust law, and Texas Instruments fell 2.4% on news of a Chinese anti-dumping investigation into US analog chipmakers. Trade tensions also persisted as President Donald Trump signaled progress in US-China talks, including a potential deal related to TikTok, though risks from tariffs and tech restrictions remain.

The Mexican peso strengthened to 18.4 per US dollar, its strongest level since July 2024, as the US dollar weakened and Mexico’s macroeconomic indicators remained stable, increasing the attractiveness of peso-denominated assets. Banco de México is maintaining a tight policy and signaling careful calibration even amid moderate inflation. Higher real interest rate differentials compared to peer countries, sustained demand for forward markets, and Mexico’s strong trade ties with the US support demand for local securities, limiting capital outflows.

European stock markets were mostly up on Monday. The German DAX (DE40) rose by 0.21%, the French CAC 40 (FR40) closed up 0.92%, the Spanish IBEX35 (ES35) gained 0.57%, and the British FTSE 100 (UK100) closed down 0.07%. The DAX Index in Frankfurt experienced some volatility. Investors are awaiting decisions from major central banks, including the US Federal Reserve, the Bank of England, the Bank of Japan, and the Bank of Canada. The US Central Bank is widely expected to cut rates by at least 25 basis points. Meanwhile, attention remains on France, as Fitch downgraded its credit rating, citing rising public debt and increasing political polarization, which raises concerns about the size of the upcoming budget deficit.

WTI crude oil prices rose nearly 1% to $63.3 per barrel on Monday, extending last week’s gains as traders weighed escalating Ukrainian drone attacks on Russian energy facilities against expectations of an impending supply surplus. Ukraine launched a major strike with over 360 drones, briefly causing a fire at the 355,000 bpd Kirishi oil refinery, just days after an attack on the Primorsk export terminal, which handles around 1 million bpd. Pressure on Moscow intensified after US President Donald Trump reaffirmed his willingness to impose massive sanctions on Russian oil if NATO allies cease their purchases, which could alter global energy flows.

On Tuesday, silver (XAG/USD) stabilized at around $42.5 per ounce, trading near its 14-year high as investors prepared for an expected US Federal Reserve rate cut this week. Markets are almost fully pricing in a 25 basis point cut on Wednesday, with 67 basis points of cuts projected by the end of the year. President Donald Trump also pressured Fed Chair Jerome Powell for a more significant cut, citing weakness in the housing market. Elsewhere, the central banks of Canada and China are expected to ease policy this week, while the central banks of Japan and the UK are likely to hold theirs unchanged. On the geopolitical front, US-China trade talks in Spain showed progress, and talks between Trump and Chinese President Xi Jinping are scheduled for Friday. Meanwhile, industrial demand from solar energy, electric vehicles, and electronics continues to intensify pressure on the physical silver market, while supply constraints support prices.

Asian markets had a strong day. The Japanese Nikkei 225 (JP225) rose by 0.89%, China’s FTSE China A50 (CHA50) climbed 0.46%, Hong Kong’s Hang Seng (HK50) gained 0.22%, and the Australian ASX 200 (AU200) posted a negative result of 0.13%.

The Bank of Thailand and the Ministry of Finance are considering introducing a tax on online gold trading in baht. Officials state the measure will limit gold exports and make holding it in the country more expensive, as the influx of dollars from gold shipments has strengthened the currency. Bank of Thailand representatives will meet with gold traders on Monday to discuss the metal’s impact and stricter reporting requirements.

S&P 500 (US500) 6,615.28 +30.99 (+0.47%)

Dow Jones (US30) 45,883.45 +49.23 (+0.11%)

DAX (DE40) 23,748.86 +50.71 (+0.21%)

FTSE 100 (UK100) 9,277.03 −6.26 (−0.07%)

USD Index 97.31 −0.24 (−0.24%)

News feed for: 2025.09.16

UK Unemployment Rate (m/m) at 09:00 (GMT+3);
German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
US Retail Sales (m/m) at 15:30 (GMT+3);
Canada Consumer Price Index (m/m) at 15:30 (GMT+3);
US Industrial Production (m/m) at 16:15 (GMT+3).

By JustMarkets

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

Economics & Fundamentals Financial News

15 Sep

Oil continues to get more expensive. The Japanese Nikkei index has reached a new all-time high

By JustMarkets

The US stocks had a mixed close on Friday. The Dow Jones (US30) fell by 0.59% for the day (+0.89% for the week). The S&P 500 (US500) dropped 0.05% (+1.33% for the week), while the tech-heavy Nasdaq (US100) closed up 0.44% (+1.54% for the week). Investors interpreted weak employment data and low inflation as signs that the Federal Reserve would lower interest rates this week. The Nasdaq jumped, driven by a 7.4% surge in Tesla shares and a 1.7% gain in Microsoft after the company avoided a potential EU antitrust fine, lifting the broader tech sector.

European stock markets were mostly down on Friday. The German DAX (DE40) fell 0.02% (-0.31% for the week), the French CAC 40 (FR40) closed up 0.02% (+1.54% for the week), the Spanish IBEX35 (ES35) dropped 0.08% (+2.86% for the week), and the British FTSE 100 (UK100) closed down 0.15% on Friday (+0.82% for the week). European stocks closed slightly lower on Friday as markets continued to assess the global rate outlook and awaited France’s credit rating from Fitch. At the same time, pharmaceutical stocks across Europe fell after Goldman Sachs downgraded Novartis due to increasing competition from generic brands, causing the company’s shares to drop by 3%, while Roche, AstraZeneca, and GSK all declined by over 1%. On Thursday, the ECB signaled that its easing cycle was complete, with President Lagarde noting that the bank is now in a “good place” and that growth risks appear more balanced.

WTI crude oil prices rose more than 1.5% on Friday. Ukrainian strikes temporarily halted operations at Primorsk, Russia’s main oil-handling port in the Baltic, and hit three pumping stations that supply the Ust-Luga hub. Meanwhile, the US reportedly said it might force G7 allies to impose tariffs of up to 100% on Chinese and Indian purchases of Russian oil, and Canada convened a meeting of finance ministers to discuss additional measures. Further pressure comes from the International Energy Agency’s forecast of a record oil supply surplus next year, with OPEC+ planning to bring idle barrels back to the market in October, albeit at a slower pace.

Asian markets had a strong week. The Japanese Nikkei 225 (JP225) rose by 3.03%, China’s FTSE China A50 (CHA50) climbed 1.88%, Hong Kong’s Hang Seng (HK50) gained 3.73%, and the Australian ASX 200 (AU200) posted a positive result of 0.11% last week. Japanese stocks reached new record highs, following gains on Wall Street. In Japan, investors continued to assess the Bank of Japan’s policy direction amid mixed economic signals and political uncertainty. Prime Minister Shigeru Ishiba recently announced his resignation, facing increasing pressure after a defeat in last year’s elections and deepening divisions within the ruling party. The Hang Seng rose by about 4%, marking its second consecutive weekly gain, fueled by reports that Beijing may direct state-owned banks to help local governments cover unpaid bills. However, gains were capped by concerns that the US could restrict supplies of Chinese medicines and tighten oversight of licensing deals for experimental drugs. Hong Kong-listed Alibaba jumped 7%, and Baidu surged nearly +4% after both companies began using their self-developed chips to train AI models, reducing their reliance on Nvidia.

China’s economy continues to face numerous risks and challenges, as evidenced by weak August 2025 data amid intensifying global issues. Economic activity was also negatively impacted by extreme weather conditions: the hottest heatwave since 1961 and the longest rainy season during the same period. Industrial production grew by 5.2% year-on-year that month, missing forecasts of 5.8% and marking the slowest growth rate in a year, while retail sales increased by 3.4%, the weakest showing in eight months and below the consensus forecast of 3.8%. The unemployment rate rose to a six-month high of 5.3%, and real estate investment continued to contract, highlighting the sector’s prolonged downturn amid tightening regulations on speculation and debt.

The New Zealand dollar declined to $0.596 on Friday but remained near multi-month highs on a weak US dollar. The US dollar was under pressure as slightly higher US consumer inflation data and a sharp increase in jobless claims maintained expectations of Federal Reserve interest rate cuts next week and beyond. At the same time, on the domestic front, the Reserve Bank of New Zealand’s dovish forecasts continue to pressure the currency. RBNZ Governor Christian Hawkesby confirmed on Thursday the central bank’s forecast for another 50 basis points of cuts to the official cash rate by the end of the year, with the pace of easing to be determined by incoming data, particularly next week’s GDP report. Meanwhile, fresh data showed that New Zealand’s manufacturing sector contracted again in August, underscoring the economy’s fragile state.

S&P 500 (US500) 6,584.29 −3.18 (−0.05%)

Dow Jones (US30) 45,834.22 −273.78 (−0.59%)

DAX (DE40) 23,698.15 −5.50 (−0.02%)

FTSE 100 (UK100) 9,283.29 −14.29 (−0.15%)

USD index 97.62 +0.08 (+0.09%)

News feed for: 2025.09.15

China Industrial Production (m/m) at 05:00 (GMT+3);
China Retail Sales (m/m) at 05:00 (GMT+3);
China Unemployment Rate (m/m) at 05:00 (GMT+3);
Switzerland Producer Price Index (m/m) at 09:30 (GMT+3);
Eurozone Trade Balance (m/m) at 12:00 (GMT+3);
Eurozone ECB President Lagarde Speaks (m/m) at 21:10 (GMT+3).

By JustMarkets

Economics & Fundamentals Financial News

15 Sep

Gold in Turmoil: All Eyes on the Fed

By RoboForex Analytical Department

Gold retreated below 3,630 USD per ounce on Monday, pulling back from last week’s record highs as investors locked in profits ahead of a pivotal US Federal Reserve policy decision.

Markets are widely anticipating a 25-basis-point rate cut this week, driven by mounting evidence of labour market softness. Expectations of further easing in 2025 are also being priced in.

Ahead of the Fed meeting, investor attention will focus on key US data releases, including retail sales and industrial production, which may offer additional clues about the health of the economy.

In a move that has raised eyebrows, the Trump administration on Sunday appealed to a federal court to remove Fed Governor Lisa Cook, heightening concerns over the central bank’s independence.

Meanwhile, traders are closely monitoring US-China trade negotiations, which resume in Madrid on Tuesday for a second day of talks.

Technical Analysis: XAU/USD

H4 Chart:

On the H4 chart, XAU/USD formed a tight consolidation range around 3,486 USD before breaking upward to complete an impulsive move towards 3,674 USD. The market is now showing signs of exhaustion, and a decline towards 3,591 USD appears likely. Currently, price action suggests the formation of a new consolidation range around 3,636 USD. A break below this range could extend the correction toward 3,486 USD, while an upward breakout might see a retest of 3,700 USD before any significant reversal. The MACD indicator supports this corrective outlook: the signal line remains above zero but has diverged from the histogram, indicating weakening momentum and potential downside.

H1 Chart:

On the H1 chart, the pair formed a consolidation range around 3,654 USD before breaking downward to complete the first leg of a correction at 3,611 USD. Following a retracement to 3,647 USD, the market appears set to resume its decline towards 3,593 USD. A break below this level could open the door to a deeper drop toward 3,486 USD. The Stochastic oscillator aligns with this bearish near-term view, with its signal line hovering above 80 and poised to turn lower towards 20.

Conclusion

Gold is consolidating near all-time highs as traders await clarity from the Fed. While the broader bullish trend remains supported by expectations of monetary easing and geopolitical uncertainty, a short-term correction is underway. The Fed’s tone – along with developments in US-China talks and political pressure on the Fed – will be crucial in determining whether this pullback deepens or becomes a buying opportunity.

Disclaimer:

Financial News Metals

14 Sep

Book Review: Hands-On AI Trading with Python, QuantConnect and AWS

AI is all the rage these days. We know this! But as investors and traders, do we know how to incorporate AI into our systems? Do we even know the many possible ways we could use AI to help our trading? Well, today I am going to do bring something a little bit different to the blog, a quick book review!

As a Python coder, automated trader and investor, I feel constantly bombarded with bits and pieces of AI trading information from newsletters or ‘how to’ tutorials to implement this or that. Luckily, I was recently given a complimentary copy of Hands-On AI Trading with Python, QuantConnect and AWS and, it turns out, this book is a comprehensive guide that brings a whole lot of information into one place with a consistent presentation and coding style.

Front cover of Hands-On AI Trading

Basic Information:

This book was written by five active data-driven market professionals that all run businesses or have positions that are aligned to the financial markets and/or using AI and automated solutions. Jiri Pik is the CEO of RocketEdge.com, Jared Broad is the founder and CEO of QuantConnect, Ernest Chan is the founder of PredictNow.AI, Philip Sun is the CEO of Adaptive Investment Solutions and Vivek Singh previously worked at a hedge fund and is now a senior product manager at AWS.

This book is targeted towards those in finance, aspiring quants, veteran quants, hedge fund traders, as well as independent traders & investors. As you can tell from the book’s title, there’s a focus on using the Python programming language as well as the services of QuantConnect, Amazon Web Services (AWS), and Predictnow.ai.

The authors present these specific tools (QuantConnect, AWS, Predictnow.ai) as a tech-stack to get things from start to finish. As stated in the book, the goal was to provide, “an easy-to-setup and use environment where readers could instantly experiment with the algorithms to build their confidence without spending any time setting up the required infrastructure.” In other words, the reader has an opportunity to go from the learning, creating and testing phase (with code and AI models) to potentially working through to a live strategy trading (through QuantConnect and their connected brokers).

I found the book to be well organized and it is structured into 3 main parts.

Part 1 is about the Capital Markets and Quantitative Trading.

Part one quickly brings those unfamiliar with the financial markets up to speed. It covers various topics from the different types of markets traded to the mechanics of how things work in the market ecosystem. This includes all the different types of participants, the different roles they play, the different types of orders these traders use as well as who has unique types of informed access. The authors go further through derivatives, futures, charting, crypto and more.

The quantitative analysis and trading part of this section brings a comprehensive overview of quantitative trader functions using QuantConnect and Python code. It details the steps, processes, and aspects that quants will go through, experience and need to consider for a successful process. I think this section will be very beneficial for aspiring and seasoned quant traders alike, as this book does a great job of laying out the market framework and the quantitative trading landscape.

Image from example in Hands-On AI Trading.

Part 2 goes into AI and Machine Learning (ML) in Algorithmic Trading.

Part two focuses on AI-based algorithmic trading. Here, you start to address the market prediction, forecasting or other specific problems you’re trying to solve. You proceed step by step, breaking down issues and finding solutions using AI and machine learning processes. It details the data set preparation, handling data, creating features, and splitting datasets into training and testing phases.

If you are unfamiliar with AI models – this section (especially Chapter 4) is for you as it delves into models like linear regression, Markov, Bayes, decision trees, support vector machines, neural networks, and many more. Found alongside these characteristics and concepts is the Python code you can use for these different types of quant functions.

Part 3 delves into Advanced Applications of AI in Trading and Risk Management.

Finally, part three discusses using these AI models in real trading and investing scenarios. The authors provide 19 specific examples and this is where I think the main strength of this book lies. These examples illustrate different aspects of the investment game or problems that are solved using various AI models for major financial markets (FX, stocks, etc.). These examples, once understood, ideally can form the basis for many new ideas, as well as just understanding how these pros go about it. Also, the Python code is included for these examples.

For instance, one of my favorite examples (#8) was just a simple exercise in using a stop-loss based on historical volatility (and drawdown recovery). This example used a LASSO regression model with features including the VIX, Average True Range (of n months) and Standard Deviation (of n months). The example used a few different methods to test variations of a dynamic stop-loss order to varying degrees of success. This type of example represents a common problem most traders come into when working through their strategies.

The examples also give interesting ideas on how to use AI and models in use cases beyond just trying to predict future price returns.

Overall Takeaway:

I thought this book was well done and is the best book that bridges quant trading and AI together that I have read so far. I think a lot of the AI and machine learning aspects were explained and guided in a clear, concise, and a well-organized way, since it’s very easy to get lost in the weeds with this subject.

The breadth of coverage among these many strategies, concepts, and factors involved is admirable, covering all the way from data acquisition and programming to the role of generative AI. There’s a lot to unpack. There’s a lot to learn. I think it’s a testament to the authors that they created a book that covers so much. There’s also a github repository for the examples.

I would recommend this book for any aspiring quant traders or programmers, or anyone who is interested in the understanding of these markets, especially in how quant trading and AI intersect. I would also recommend it for traders looking for examples of AI in trading or finding new ideas to implement AI strategies.

Disclaimer: Complimentary book copy was provided by Wiley.

Article written by Zac@InvestMacro

Opinions Programming

14 Sep

Large Speculators push Mexican Peso Bets to a 65-week high

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday September 9th 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 Brazilian Real & Japanese Yen

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 was the Brazilian Real (22,918 contracts) with the Japanese Yen (18,385 contracts), the EuroFX (6,085 contracts), the Australian Dollar (3,452 contracts), the Mexican Peso (719 contracts), Bitcoin (434 contracts) and the Canadian Dollar (59 contracts) also showing positive weeks.

The currencies seeing declines in speculator bets on the week were the Swiss Franc (-2,951 contracts), the New Zealand Dollar (-2,269 contracts), the US Dollar Index (-537 contracts) and with the British Pound (-465 contracts) also registering lower bets on the week.

Large Speculators push Mexican Peso Bets to a 65-week high

Highlighting the currency speculator positions this week is the increasingly bullish Mexican Peso sentiment. Speculators boosted their bullish bets for the Mexican Peso this week for a fourth consecutive week and for the seventh time out of the past eight weeks. The Peso position has now added +23,610 net contracts over these past eight weeks and this bullish momentum has brought the current net standing to a total of +73,732 net bullish contracts.

This marks the highest level for the Mexican Peso contracts in the past 65 weeks, dating back to June 11th of 2024 when the net position was last over +100,000 contracts. The Peso positioning was strong throughout the first half of 2024 with 15 consecutive weeks of contracts over the +100,000 contract level. Peso bets then started to cool off mid-2024 and steadily decreased to an overall negative net position on January 21st of 2025. Since then, contracts have rebounded, improved and increased to this week’s 65-week high.

Despite the increased bullishness for the Peso, the strength score is still just modestly high at 66% of its three-year range. This shows that if bullish momentum continues, there is plenty of room to go before a bullish extreme is reached.

The Mexican Peso position in the exchange markets versus the US dollar has been on an uptrend since the beginning of the year. The Peso has risen through its 200-week moving average and is currently up 13.10% against the US Dollar so far.

Bitcoin leads Price Performance for the Week

The currency market price performance this week was led by Bitcoin, which rose by 4.41% for the past 5 days. Bitcoin is now up by 13% over the last 90 days.

Next was the Australian Dollar, which increased by 1.50% this week. The Australian Dollar is up by 3% over the last 30 days and is higher by 3.74% over the last 90 days. The Mexican Peso came in next with a 1.47% gain and the Peso has risen by 5.57% over the past 90 days.

The New Zealand Dollar advanced by 1.16% over the last five days. The Brazilian Real saw a gain of 0.86% while the Real is now up by approximately 6% in the last 90 days.

The British Pound Sterling came in next with a 0.45% rise, followed by the Swiss Franc, which was higher by 0.26%. The Euro saw prices edge up by just 0.16% and the Canadian Dollar was virtually unchanged with a 0.05% advance.

On the downside, the US Dollar Index was virtually unchanged, down by -0.07%, while the Japanese Yen was just a tick lower with a -0.09% decline.

Currencies Data:

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

Strength Scores led by Brazilian Real & EuroFX

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the Brazilian Real (90 percent) and the EuroFX (77 percent) lead the currency markets this week. The Japanese Yen (76 percent), Mexican Peso (66 percent) and the New Zealand Dollar (54 percent) come in as the next highest in the weekly strength scores.

On the downside, the US Dollar Index (4 percent) and the British Pound (11 percent) come in at the lowest strength levels currently and are in Extreme-Bearish territory (below 20 percent). The next lowest strength scores are the Australian Dollar (20 percent).

3-Year Strength Statistics:
US Dollar Index (3.7 percent) vs US Dollar Index previous week (5.0 percent)
EuroFX (76.6 percent) vs EuroFX previous week (74.3 percent)
British Pound Sterling (10.8 percent) vs British Pound Sterling previous week (11.0 percent)
Japanese Yen (75.9 percent) vs Japanese Yen previous week (70.8 percent)
Swiss Franc (42.5 percent) vs Swiss Franc previous week (48.4 percent)
Canadian Dollar (43.1 percent) vs Canadian Dollar previous week (43.1 percent)
Australian Dollar (20.1 percent) vs Australian Dollar previous week (17.6 percent)
New Zealand Dollar (54.4 percent) vs New Zealand Dollar previous week (57.0 percent)
Mexican Peso (66.4 percent) vs Mexican Peso previous week (66.0 percent)
Brazilian Real (90.1 percent) vs Brazilian Real previous week (71.5 percent)
Bitcoin (42.8 percent) vs Bitcoin previous week (33.6 percent)

Brazilian Real & Bitcoin top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the Brazilian Real (26 percent) and Bitcoin (11 percent) lead the past six weeks trends for the currencies. The Mexican Peso (9 percent) was the next highest positive mover in the 3-Year trends data.

The Canadian Dollar (-16 percent) leads the downside trend scores currently with the British Pound (-11 percent), Swiss Franc (-10 percent) and the New Zealand Dollar (-8 percent) following next with lower trend scores.

3-Year Strength Trends:
US Dollar Index (-3.5 percent) vs US Dollar Index previous week (-3.9 percent)
EuroFX (0.9 percent) vs EuroFX previous week (-2.3 percent)
British Pound Sterling (-11.0 percent) vs British Pound Sterling previous week (-17.1 percent)
Japanese Yen (0.7 percent) vs Japanese Yen previous week (-9.2 percent)
Swiss Franc (-9.7 percent) vs Swiss Franc previous week (0.4 percent)
Canadian Dollar (-16.0 percent) vs Canadian Dollar previous week (-19.1 percent)
Australian Dollar (-0.8 percent) vs Australian Dollar previous week (-1.0 percent)
New Zealand Dollar (-7.7 percent) vs New Zealand Dollar previous week (-3.8 percent)
Mexican Peso (8.7 percent) vs Mexican Peso previous week (8.6 percent)
Brazilian Real (26.1 percent) vs Brazilian Real previous week (5.9 percent)
Bitcoin (11.4 percent) vs Bitcoin previous week (20.1 percent)

Individual COT Forex Markets:

US Dollar Index Futures:

The US Dollar Index large speculator standing this week reached a net position of -5,558 contracts in the data reported through Tuesday. This was a weekly lowering of -537 contracts from the previous week which had a total of -5,021 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 3.7 percent. The commercials are Bullish-Extreme with a score of 99.8 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 15.6 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend.

US DOLLAR INDEX Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	50.5	34.9	6.8
– Percent of Open Interest Shorts:	65.1	17.5	9.7
– Net Position:	-5,558	6,642	-1,084
– Gross Longs:	19,192	13,288	2,604
– Gross Shorts:	24,750	6,646	3,688
– Long to Short Ratio:	0.8 to 1	2.0 to 1	0.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	3.7	99.8	15.6
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-3.5	6.4	-18.9

Euro Currency Futures:

The Euro Currency large speculator standing this week reached a net position of 125,677 contracts in the data reported through Tuesday. This was a weekly advance of 6,085 contracts from the previous week which had a total of 119,592 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 76.6 percent. The commercials are Bearish-Extreme with a score of 20.0 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 88.4 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend.

EURO Currency Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	29.4	53.4	11.4
– Percent of Open Interest Shorts:	15.1	73.9	5.3
– Net Position:	125,677	-179,647	53,970
– Gross Longs:	258,049	468,861	100,417
– Gross Shorts:	132,372	648,508	46,447
– Long to Short Ratio:	1.9 to 1	0.7 to 1	2.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	76.6	20.0	88.4
– Strength Index Reading (3 Year Range):	Bullish	Bearish-Extreme	Bullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	0.9	-1.3	3.3

British Pound Sterling Futures:

The British Pound Sterling large speculator standing this week reached a net position of -33,605 contracts in the data reported through Tuesday. This was a weekly reduction of -465 contracts from the previous week which had a total of -33,140 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 10.8 percent. The commercials are Bullish with a score of 78.9 percent and the small traders (not shown in chart) are Bullish with a score of 70.2 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

BRITISH POUND Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	23.2	57.1	10.4
– Percent of Open Interest Shorts:	33.6	47.9	9.2
– Net Position:	-33,605	29,784	3,821
– Gross Longs:	74,849	184,370	33,639
– Gross Shorts:	108,454	154,586	29,818
– Long to Short Ratio:	0.7 to 1	1.2 to 1	1.1 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	10.8	78.9	70.2
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-11.0	7.1	10.8

Japanese Yen Futures:

The Japanese Yen large speculator standing this week reached a net position of 91,643 contracts in the data reported through Tuesday. This was a weekly increase of 18,385 contracts from the previous week which had a total of 73,258 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 75.9 percent. The commercials are Bearish with a score of 25.6 percent and the small traders (not shown in chart) are Bullish with a score of 63.2 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

JAPANESE YEN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	44.0	38.4	10.6
– Percent of Open Interest Shorts:	21.7	62.9	8.5
– Net Position:	91,643	-100,442	8,799
– Gross Longs:	180,724	157,854	43,537
– Gross Shorts:	89,081	258,296	34,738
– Long to Short Ratio:	2.0 to 1	0.6 to 1	1.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	75.9	25.6	63.2
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	0.7	-2.0	12.9

Swiss Franc Futures:

The Swiss Franc large speculator standing this week reached a net position of -28,839 contracts in the data reported through Tuesday. This was a weekly fall of -2,951 contracts from the previous week which had a total of -25,888 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 42.5 percent. The commercials are Bearish with a score of 49.7 percent and the small traders (not shown in chart) are Bullish with a score of 70.4 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend.

SWISS FRANC Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	6.6	74.1	16.5
– Percent of Open Interest Shorts:	34.1	44.8	18.4
– Net Position:	-28,839	30,815	-1,976
– Gross Longs:	6,989	77,874	17,332
– Gross Shorts:	35,828	47,059	19,308
– Long to Short Ratio:	0.2 to 1	1.7 to 1	0.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	42.5	49.7	70.4
– Strength Index Reading (3 Year Range):	Bearish	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-9.7	4.1	9.7

Canadian Dollar Futures:

The Canadian Dollar large speculator standing this week reached a net position of -108,917 contracts in the data reported through Tuesday. This was a weekly advance of 59 contracts from the previous week which had a total of -108,976 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 43.1 percent. The commercials are Bullish with a score of 60.9 percent and the small traders (not shown in chart) are Bearish with a score of 26.5 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend.

CANADIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	7.5	77.2	10.1
– Percent of Open Interest Shorts:	51.2	31.1	12.6
– Net Position:	-108,917	115,041	-6,124
– Gross Longs:	18,704	192,465	25,216
– Gross Shorts:	127,621	77,424	31,340
– Long to Short Ratio:	0.1 to 1	2.5 to 1	0.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	43.1	60.9	26.5
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-16.0	16.6	-15.1

Australian Dollar Futures:

The Australian Dollar large speculator standing this week reached a net position of -79,231 contracts in the data reported through Tuesday. This was a weekly advance of 3,452 contracts from the previous week which had a total of -82,683 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 20.1 percent. The commercials are Bullish with a score of 73.6 percent and the small traders (not shown in chart) are Bullish with a score of 64.9 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

AUSTRALIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	15.5	67.8	12.1
– Percent of Open Interest Shorts:	53.5	32.6	9.2
– Net Position:	-79,231	73,221	6,010
– Gross Longs:	32,200	141,051	25,129
– Gross Shorts:	111,431	67,830	19,119
– Long to Short Ratio:	0.3 to 1	2.1 to 1	1.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	20.1	73.6	64.9
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-0.8	-1.1	7.8

New Zealand Dollar Futures:

The New Zealand Dollar large speculator standing this week reached a net position of -8,743 contracts in the data reported through Tuesday. This was a weekly lowering of -2,269 contracts from the previous week which had a total of -6,474 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 54.4 percent. The commercials are Bearish with a score of 46.3 percent and the small traders (not shown in chart) are Bearish with a score of 26.8 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend.

NEW ZEALAND DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	21.6	53.2	5.1
– Percent of Open Interest Shorts:	33.8	38.0	8.0
– Net Position:	-8,743	10,841	-2,098
– Gross Longs:	15,479	38,065	3,637
– Gross Shorts:	24,222	27,224	5,735
– Long to Short Ratio:	0.6 to 1	1.4 to 1	0.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	54.4	46.3	26.8
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-7.7	10.9	-38.5

Mexican Peso Futures:

The Mexican Peso large speculator standing this week reached a net position of 73,732 contracts in the data reported through Tuesday. This was a weekly gain of 719 contracts from the previous week which had a total of 73,013 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 66.4 percent. The commercials are Bearish with a score of 34.4 percent and the small traders (not shown in chart) are Bearish with a score of 43.8 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend.

MEXICAN PESO Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	50.4	41.7	3.3
– Percent of Open Interest Shorts:	15.8	78.1	1.5
– Net Position:	73,732	-77,535	3,803
– Gross Longs:	107,503	89,064	7,051
– Gross Shorts:	33,771	166,599	3,248
– Long to Short Ratio:	3.2 to 1	0.5 to 1	2.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	66.4	34.4	43.8
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	8.7	-9.0	2.1

Brazilian Real Futures:

The Brazilian Real large speculator standing this week reached a net position of 56,087 contracts in the data reported through Tuesday. This was a weekly boost of 22,918 contracts from the previous week which had a total of 33,169 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 8.4 percent and the small traders (not shown in chart) are Bearish with a score of 43.5 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend.

BRAZIL REAL Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	62.9	32.0	4.5
– Percent of Open Interest Shorts:	10.7	87.9	0.8
– Net Position:	56,087	-60,098	4,011
– Gross Longs:	67,641	34,405	4,856
– Gross Shorts:	11,554	94,503	845
– Long to Short Ratio:	5.9 to 1	0.4 to 1	5.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	90.1	8.4	43.5
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	26.1	-26.5	5.4

Bitcoin Futures:

The Bitcoin large speculator standing this week reached a net position of -468 contracts in the data reported through Tuesday. This was a weekly advance of 434 contracts from the previous week which had a total of -902 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 42.8 percent. The commercials are Bullish with a score of 57.9 percent and the small traders (not shown in chart) are Bullish with a score of 58.7 percent.

Price Trend-Following Model: Uptrend

Our weekly trend-following model classifies the current market price position as: Uptrend.

BITCOIN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	85.7	4.0	4.7
– Percent of Open Interest Shorts:	87.4	3.8	3.2
– Net Position:	-468	56	412
– Gross Longs:	23,075	1,081	1,263
– Gross Shorts:	23,543	1,025	851
– Long to Short Ratio:	1.0 to 1	1.1 to 1	1.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	42.8	57.9	58.7
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	11.4	-10.6	-3.4

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

13 Sep

Speculator Extremes: MSCI EAFE-Mini & Lean Hogs lead weekly Bullish Positions

By InvestMacro

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on September 9th.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the data table or cot leaders table)

Here Are This Week’s Most Bullish Speculator Positions:

MSCI EAFE MINI

The MSCI EAFE MINI speculator position continues to come in as the most bullish extreme standing again this week as the MSCI EAFE-Mini speculator level is currently at a 99 percent (just below the maximum 100%) score of its 3-year range.

The six-week trend for the percent strength score totaled a gain of 6 percentage points this week. The overall net speculator position was a total of 13,583 net contracts this week with a small rise of 891 contract in the weekly speculator bets.

Speculators or Non-Commercials Notes:
Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.
These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

Lean Hogs

The Lean Hogs speculator position comes next in the extreme standings this week. The Lean Hogs speculator level is now at a 96 percent score of its 3-year range.

The six-week trend for the percent strength score was an increase by 13 percentage points this week. The speculator position registered 91,584 net contracts this week with a weekly boost of 8,244 contracts in speculator bets.

Brazil Real

The Brazil Real speculator position comes in third this week in the extreme standings with the BRL speculator level residing at a 90 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at an increase by 26 percentage points this week while the overall speculator position was 56,087 net contracts this week with a rise of 22,918 contracts in the weekly speculator bets.

Live Cattle

The Live Cattle speculator position comes up number four in the extreme standings this week. The Live Cattle speculator level is at a 83 percent score of its 3-year range.

The six-week trend for the speculator strength score saw no change this week. The overall speculator position was 106,678 net contracts this week with a decline of -3,557 contracts in the speculator bets.

Silver

The Silver speculator position rounds out the top five in this week’s bullish extreme standings. The Silver speculator level sits at a 82 percent score of its 3-year range. The six-week trend for the speculator strength score was a drop by -7 percentage points this week.

The speculator position was 53,937 net contracts this week with a decrease of -1,986 contracts in the weekly speculator bets.

The Most Bearish Speculator Positions of the Week:

VIX

The VIX speculator position comes in tied as the most bearish extreme standing this week with the VIX speculator level is at a 0 percent score of its 3-year range.

The six-week trend for the speculator strength score was a drop by -34 percentage points this week. The overall speculator position was -107,810 net contracts this week with a dip of -858 contracts in the speculator bets.

Sugar

The Sugar speculator position comes in tied for the most bearish extreme standing on the week with the Sugar speculator level at a 0 percent score of its 3-year range.

The six-week trend for the speculator strength score was a decline by -18 percentage points this week. The speculator position was -139,610 net contracts this week with a sharp drop of -53,805 contracts in the weekly speculator bets.

WTI Crude Oil

The WTI Crude Oil speculator position comes in tied as the most bearish extreme standing of the week. The WTI Crude speculator level resides at a 0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -28 percentage points this week. The overall speculator position was 81,844 net contracts this week with a reduction by -20,584 contracts in the speculator bets.

US Dollar Index

The US Dollar Index speculator position comes in as this week’s fourth most bearish extreme standing with the USD Index speculator level at a 4 percent score of its 3-year range.

The six-week trend for the speculator strength score was a dip by -4 percentage points this week while the speculator position was -5,558 net contracts this week with a shortfall of -537 contracts in the weekly speculator bets.

5-Year Bond

Next, the 5-Year Bond speculator position comes in as the fifth most bearish extreme standing for this week. The 5-Year speculator level is at a 6 percent score of its 3-year range.

The six-week trend for the speculator strength score was a decline by -2 percentage points this week. The speculator position was -2,554,763 net contracts this week with a jump by 127,224 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

COT Updates Opinions

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

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