10 Apr

What is reinforcement learning? An AI researcher explains a key method of teaching machines – and how it relates to training your dog

By Ambuj Tewari, University of Michigan 

Understanding intelligence and creating intelligent machines are grand scientific challenges of our times. The ability to learn from experience is a cornerstone of intelligence for machines and living beings alike.

In a remarkably prescient 1948 report, Alan Turing – the father of modern computer science – proposed the construction of machines that display intelligent behavior. He also discussed the “education” of such machines “by means of rewards and punishments.”

Turing’s ideas ultimately led to the development of reinforcement learning, a branch of artificial intelligence. Reinforcement learning designs intelligent agents by training them to maximize rewards as they interact with their environment.

As a machine learning researcher, I find it fitting that reinforcement learning pioneers Andrew Barto and Richard Sutton were awarded the 2024 ACM Turing Award.

What is reinforcement learning?

Animal trainers know that animal behavior can be influenced by rewarding desirable behaviors. A dog trainer gives the dog a treat when it does a trick correctly. This reinforces the behavior, and the dog is more likely to do the trick correctly the next time. Reinforcement learning borrowed this insight from animal psychology.

But reinforcement learning is about training computational agents, not animals. The agent can be a software agent like a chess-playing program. But the agent can also be an embodied entity like a robot learning to do household chores. Similarly, the environment of an agent can be virtual, like the chessboard or the designed world in a video game. But it can also be a house where a robot is working.

Just like animals, an agent can perceive aspects of its environment and take actions. A chess-playing agent can access the chessboard configuration and make moves. A robot can sense its surroundings with cameras and microphones. It can use its motors to move about in the physical world.

Agents also have goals that their human designers program into them. A chess-playing agent’s goal is to win the game. A robot’s goal might be to assist its human owner with household chores.

The reinforcement learning problem in AI is how to design agents that achieve their goals by perceiving and acting in their environments. Reinforcement learning makes a bold claim: All goals can be achieved by designing a numerical signal, called the reward, and having the agent maximize the total sum of rewards it receives.

Reinforcement learning from human feedback is key to keeping AIs aligned with human goals and values.

Researchers do not know if this claim is actually true, because of the wide variety of possible goals. Therefore, it is often referred to as the reward hypothesis.

Sometimes it is easy to pick a reward signal corresponding to a goal. For a chess-playing agent, the reward can be +1 for a win, 0 for a draw, and -1 for a loss. It is less clear how to design a reward signal for a helpful household robotic assistant. Nevertheless, the list of applications where reinforcement learning researchers have been able to design good reward signals is growing.

A big success of reinforcement learning was in the board game Go. Researchers thought that Go was much harder than chess for machines to master. The company DeepMind, now Google DeepMind, used reinforcement learning to create AlphaGo. AlphaGo defeated top Go player Lee Sedol in a five-match game in 2016.

A more recent example is the use of reinforcement learning to make chatbots such as ChatGPT more helpful. Reinforcement learning is also being used to improve the reasoning capabilities of chatbots.

Reinforcement learning’s origins

However, none of these successes could have been foreseen in the 1980s. That is when Barto and his then-Ph.D. student Sutton proposed reinforcement learning as a general problem-solving framework. They drew inspiration not only from animal psychology but also from the field of control theory, the use of feedback to influence a system’s behavior, and optimization, a branch of mathematics that studies how to select the best choice among a range of available options. They provided the research community with mathematical foundations that have stood the test of time. They also created algorithms that have now become standard tools in the field.

It is a rare advantage for a field when pioneers take the time to write a textbook. Shining examples like “The Nature of the Chemical Bond” by Linus Pauling and “The Art of Computer Programming” by Donald E. Knuth are memorable because they are few and far between. Sutton and Barto’s “Reinforcement Learning: An Introduction” was first published in 1998. A second edition came out in 2018. Their book has influenced a generation of researchers and has been cited more than 75,000 times.

Reinforcement learning has also had an unexpected impact on neuroscience. The neurotransmitter dopamine plays a key role in reward-driven behaviors in humans and animals. Researchers have used specific algorithms developed in reinforcement learning to explain experimental findings in people and animals’ dopamine system.

Barto and Sutton’s foundational work, vision and advocacy have helped reinforcement learning grow. Their work has inspired a large body of research, made an impact on real-world applications, and attracted huge investments by tech companies. Reinforcement learning researchers, I’m sure, will continue to see further ahead by standing on their shoulders.The Conversation

About the Author:

Ambuj Tewari, Professor of Statistics, University of Michigan

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

 

Opinions Programming
09 Apr

Stock Rotation Will Benefit Gold Stocks

Source: Adrian Day (4/8/25) 

Adrian Day of Adrian Day Asset Management shares a comprehensive portfolio review, which includes thoughts on the current state of the market, gold, silver, copper, oil and gas, and uranium.

The new U.S. Administration may have hastened some economic and market trends, but the underlying factors were already underway. Inflation has been picking up since last July; the U.S. consumer has been pulling on the reins for months now amid tapped-out credit; the Federal government has been careening towards a debt crisis.

The stock market was ripe for a correction, bonds have been weak, while gold had been on a tear for a couple of years. The new administration’s actions and policies, and the uncertainty created by them sparked some of these developments, but the trends were already underway.

The Move To Global Markets Starts

For the first time in several years, the U.S. market is underperforming global equities. The S&P fell 4.6% and Nasdaq just over 10% for the quarter, while stocks outside the U.S. rose 4.6% (per the Morgan Stanley-Capital International World ex-U.S. Index). Most European markets were up by the mid-teens, while most of Asia fell, with Hong Kong (up 15%) and Singapore (up 6.6%) the major exceptions. Tech stocks were the biggest losers.

Our global accounts outperformed the indexes, with our mid-risk growth accounts up just over 16% for the quarter.* (See disclosures below.)

Conservative accounts were up somewhat less — virtually 12% — and more aggressive accounts a tad more. In all cases, however, our global accounts outperformed the benchmarks. The main reasons were a low exposure to the U.S. markets and above-weight exposure to Hong Kong and Singapore, while a high allocation to gold stocks also clearly helped. Going forward, we expect these same factors to help us in the next quarter or more.

Gold Stocks Have Started To Move, Seniors First

As always, commodities were mixed, with the complex up just under 8% (per Bloomberg Commodity Index). Gold, silver, and copper led the metals, while natural gas was also strong. Oil was essentially flat. The major gold stocks finally outperformed the metal; while gold rose 20% in the first quarter, the senior gold stocks (per the XAU) jumped 29%.

Though our resource accounts, up 17.5%, well outperformed the resource index, our gold accounts, up 17.4%, lagged. The main reasons our resource accounts outperformed were a high exposure to the top-performing gold, silver, and copper and a low exposure to oil.

In gold accounts, our exposure to smaller companies hurt relative performance since these smaller stocks have barely budged as the seniors surged ahead. This will change as the bull market develops and retail investors return to the sector. In addition, the most leveraged stocks can have the most dramatic moves early on, but they don’t sustain those moves.

Uncertainty and Volatility Lie Ahead

The last quarter provides a look at what we can expect over the next four years, including a high degree of uncertainty. One thing is certain, though: it won’t be like the last four years.

The markets will be unpredictable and volatile, and the winners of the last four years — U.S. stocks, tech, and the dollar — may not be the winners of the period ahead.

Gold, which has actually gained more than the S&P Index over the past four years, may continue to shine: it responds well to uncertainty, whether geopolitical, economic, or monetary.

Much of this uncertainty arises from what is known as the “Mar-A-Lago Accord,” notwithstanding that the primary author has walked back its import in recent weeks.

The “Accord” refers to a set of economic and monetary policies espoused by various people around President Trump to reset the global financial system. It is not (yet) a complete, specific plan.

Rather, it is a collection of ideas, some well-formulated, some aspirational, and some conflicting.

Security Will Be Linked With Debt

The aims behind the so-called “Accord” are to lower debt and interest payments, get foreign countries to pay more and end what is viewed as foreign countries living off the U.S., end what is deemed “persistent dollar overvaluation,” and bring manufacturing back to the U.S.

Among the ideas put forward is the concept advanced by Treasury Secretary Scott Bessent to monetize the U.S.’s assets, including revaluing the U.S. gold reserves. The idea has been floated of using government assets as collateral for loans, thus — theoretically, at least — reducing the interest rate required to be paid on these loans. Another proposal would require foreign governments to exchange Treasuries that they hold for 50-year, non-tradeable, zero-coupon bonds. In exchange, these countries would receive the military protection of the U.S. and access to U.S. market.

Many of the ideas came in a paper last November written by now-Chairman of the White House Council of Economic Advisors Stephen Miran, in which he termed the phrase “Mar-A-Lago Accord,” a riff on the 1985 Plaza Accord. He has since tried to walk back the idea of a restructuring of the global financial system, saying that his paper was “a catalog of available options…(not) the source of the policy agenda.” He added that the paper presented “various recipes (but) the President is the chef.”

We have seen specific moves towards some of this with the Trump tariffs, as well as demands for European nations to pay more towards NATO and the defense of Europe, but as yet no holistic plan towards implementing the restructuring of the global financial system. But whether it comes in one grand scheme or piecemeal, policy is moving in that direction. The implications for markets — let alone geopolitics and the  global economy — are vast and wide-ranging.

Respected advisor Jim Bianco hit the nail on the head when he warned, “Don’t take this literally, but do take it seriously.”

Having the Reserve Currency Comes With Benefits

The thinking behind some of the aims is real, if one-sided and exaggerated. But one fundamental is wrong or, at minimum, incomplete. Having the world’s reserve currency carries costs and obligations, but it also enables the country to print more money than it otherwise could, knowing that other countries will buy its debt.

Thus, it increases the country’s standard of living and exports inflation. This comes at the cost of a higher value of the currency, hurting exports and domestic industry. It is not for nothing that having the world’s reserve currency has been called (by then-French Finance Minister Valéry Giscard d’Estaing) “the exorbitant privilege.”

One major problem with having that privilege is what happens when one starts to lose it (in this case, either because other countries start to turn away from using the dollar or when the U.S. itself tries to lower the dollar’s value): money held abroad starts to come back, increasing inflation; imports become more expensive; interest rates increase (because other countries are less inclined to hold U.S. debt); and the debt becomes an intolerable burden. Look at what happened to Britain after 1945.

In 1985, at the time of the Plaza Accord, allies Japan, Taiwan, Canada, and Germany had the largest trade surpluses with the U.S. Today, China has the largest trade surplus with the U.S., while Vietnam has the third largest (Mexico the second), and they will not so readily succumb to U.S. carrots or sticks. Certainly, the leading trade surplus countries in 1985 relied on U.S. security, but that is not the case with many of today’s leading surplus countries. Similarly, the countries with the largest holdings of long-term Treasuries are not likely to take kindly to these threats. So, it is not even clear that a new currency accord would even work today, and certainly not with the agreement of leading trading countries.

Moves Could Hurt the Treasury Market

The mere idea of such a proposal is hardly an incentive for governments to buy more U.S. bonds, and is likely to only speed up the move away from the dollar in foreign central bank reserves. In the short term, this may well help depress the value of the dollar (over what it otherwise would be). And it would also make it more difficult for the U.S. to sell long-term bonds, thus driving up yields at the long end.

There is already an impending debt crisis in the U.S., rapidly moving towards denouement. The U.S. is issuing most of its debt in the short term because there is a shortage of traditional buyers of long-term bonds. The Treasury would have difficulty selling long-term bonds of any size without a meaningful increase in the interest paid.

The government has been doing this increasingly over the past 16 years after missing the opportunity to issue ultra-long-dated bonds when interest rates were at zero. This is a crisis that has to be dealt with, and probably before the end of this year, with or without broad restructuring and policy changes. It will likely lead to the end of Quantitative Tightening (QT) and another round of Quantitative Easing (QE).

The Fed is Changing Policy

This shift is already underway. Earlier in the month, the Federal Reserve decided to reduce the pace of the roll-off from the Fed’s balance sheet. While not changing the reduction in mortgage-backed securities, the Fed slashed the rate of the roll-off in Treasuries from an already-cut $25 billion a month to just $5 billion.

Given a balance sheet of $6.76 trillion ($4.23 trillion of which is in Treasuries), Bill Fleckenstein is right to call this “a rounding error.” The balance sheet remains higher, by more than 60%, from where it stood on the eve of COVID-19, despite three years of QT.

During his post-meeting press conference, Fed Chairman Jerome Powell was at pains to say repeatedly that nothing should be read into this. It was to do with money markets, he said, or maybe to do with the debt

ceiling, but “don’t take any signal from it.” That is just plain nonsense. This move is clearly to help the long-term Treasury market, which already has few buyers at current rates. Powell himself said the Fed would stop the reduction in Treasury holdings “at some point.” In my view, it is a precursor to a new round of QE from the Fed, likely later this year. It may not be called QE, but that is what it will be.

Whether we see just QE and tariffs or a broader set of policies, depending on whether they are implemented successfully, they would likely lead to more stock market weakness (probably after a near-term contrarian rally), bond market weakness, and some dollar weakness. But every one of these policies would be gold positive, if only by increasing uncertainty, both in the near term as well as over the longer term. Gold reacts positively to chaos and uncertainty, to disruption and volatility.

A Change in the Monetary System Presages Commodity Bull Market

Not only gold but also commodities will generally likely respond positively.

As analysts Goehring & Rozencwajg have noted, every past commodity bull market has been set in motion by a shock to the global monetary system, citing 1929 (end of the return to the gold standard), 1969 (end of Bretton Woods) and 1999 (end of the dollar pegs).

“A major shift in the global monetary system may be imminent,” and commodities are already responding to this, although fundamentally, commodities are as low relative to financial assets as they have been at any time in the last 100 years, cheaper even than at those three previous points of extreme under-valuation.

I must quote Goehring & Rozencwajg: “If gold is the canary in the coal mine, it is singing loudly.”

Each of those previous troughs in commodity prices against financial asset prices was followed not only by strong bull markets in commodities but also by weakness in stocks. In less than three years after the market crash in October 1929, the Dow fell 88%; stocks were still trading below their 1969 peak seven years later; while the S&P did not exceed its dot-com bubble highs until 2007, and then only very briefly, not to move sustainably higher until 2013.

The stock Rotation is Underway

U.S. stocks have been overvalued and extended for some time, with high valuation multiples, very narrow breadth, weak market internals, and so on. The February correction is but a beginning to what I expect will be an extended period of decline and rotation out of the erstwhile leaders and into markets and sectors that have lagged, or that offer attractive valuations.

(To be clear, we could see a contrarian bounce in the immediate term — the mid-March rally was very meager — but further out, we suspect the S&P will be lower.)

Respected market analyst John Hussman says that by many measures, the U.S. stock market is more overvalued today than even in 1999 or 1929. Price to sales; market cap vs GDP; market cap to Gross Value- added: all these and more show a market at historic valuation extremes. Other indicators, such as market breadth, support that assertion, while margin levels and excess speculation suggest a market that could drop sharply.

If we do see an extended period of weakness in the stock market, history would suggest that short-term Treasuries and gold are the assets most likely to do well. Other commodities also often do well. And even

within equities, some markets and sectors start to outperform as the old leaders fall. These include defensive and dividend-paying stocks, as well as small-cap value.

Global Stocks Start to Outperform

Global markets could also benefit from the weakness in the U.S. market; they have experienced the longest period of underperformance relative to the U.S. ever. The turn is beginning. Stocks outside the U.S. (per Morgan Stanely-Capital International World Ex-U.S. Index) are up 6.5% this year, against a negative 5% plus for U.S. stocks. European stock markets have done even better, up in the mid-teens this year.

In the U.S., growth stocks, which have dramatically and consistently outperformed value since the Great Financial Crisis, the trends have reversed, with value now outperforming growth and small-cap value even more so.

These styles, sectors, and markets are the ones that should outperform in the next period. The extent to which various groups outperform depends largely on how the dollar, interest rates, inflation, and other economic factors perform. Rising interest rates would dampen returns on dividend-paying stocks, while a declining dollar should help emerging markets, for example.

But as per above, the sector most likely to outperform is the commodity sector, and within that, gold has the best risk-reward. Though commodities generally are likely to outperform, they have a risk that gold does not, namely a sharp economic slowdown in China and global economic retraction.

Gold Drivers Remain Intact

Gold, however, does not have that risk. We have discussed several times over the past many quarters why gold has been going up. We do not see the drivers for gold demand changing, be it central banks buying to diversify their reserves amid increased dollar weaponization or Chinese consumers concerned at the loss of purchasing power and a fragile banking system. Western investors are concerned about political uncertainty amid unsustainably high debt levels in many governments.

None of this is likely to change, and gold thus is likely to be higher a year from now, notwithstanding the possibility of a pullback at some stage. Gold has moved well above trend line, but there is yet no manic buying, certainly not in North America; premiums on coins and bars tell the opposite story.

Why Are the Stocks Lagging?

The main investor concern of the past couple of years has been the disconnect between bullion and gold equities. Though the major gold stocks are up nearly 40% over the past 12 months — that’s five times the return on the S&P over the same period!  — they have only just matched gold’s returns and not exhibited the traditional leverage. At the same time, many intermediate and junior gold stocks have barely budged.

As we have explained previously, this is not surprising given where the demand for gold has come from. Whether it is central banks, Chinese consumers worried about their economy, or global investors concerned about uncertainty amid high debt levels, these buyers will focus on bullion, not gold miners.

Stock Rotation Will Benefit Gold Stocks

We can now see the first beginnings of a turn. Finally, the largest gold equity ETF, the VanEck Gold Miners ETF (GDX), has reported some net inflows.

This was a single day in mid-March, the first and only reported net inflow this year. Though it was just $6.4 million of inflows, and the subsequent two weeks have seen $317 million in net outflows — the fund has lost $1.99 billion in assets this year — it is a small sign of an impending shift. (See table)

As a contrarian indicator, this is hopeful.

Further declines in the broad market will see money flow to undervalued sectors, including gold stocks. With the gold stocks having outperformed the S&P five-fold over the last year — did you read about that in The Wall Street Journal or hear it on CNBC? — With gold at record highs and mining company margins expanding, the broad investing public is going to notice sooner or later.

And despite the price moves, the valuations of the gold miners remain, in many cases, near their long-term lows.

Top Resource Sectors Have Supply Constraints

Other commodities may also do well. We favor the resources with growing demand and supply constraints.

Among these, copper and uranium stand out. The copper price has now moved above previous highs of 2010 to new all-time highs on the growing appreciation of a pending deficit by the end of this decade.

The huge potential increases in demand for copper from electrification, EVs, and AI are well known, but significantly, these uses represent only a relatively small part of the demand for copper over the next decade.

Even if EV adoption slows dramatically and the build-out for power for AI is behind us, demand for copper will continue to grow and exceed probable new supply. As we have written before, given the very long lags in bringing new copper online, the likely copper supply five or even 10 years into the future can be estimated with relative accuracy. There will not be enough copper in five years to meet demand.

The biggest risk to copper is on the demand side: a significant slowdown in China, which still purchases nearly two-thirds of the world’s copper. Longer term, there could be new technologies that speed up discovery and development, and in the U.S., the acceleration of the permitting process will bring some projects into production sooner. But none of this will meaningfully affect the global copper supply over the next five years.

Uranium Decline Is Short Term

The uranium price has declined from $95/lb to $65 over the past year. The liquidation of a physical fund (in Kazakhstan) put supply on the market somewhat indiscriminately. This came amid repeated references by the first candidate, then President Trump, to denuclearization. The last time the superpowers decommissioned nuclear warheads was in the late 1980s; it was followed by a sustained period of low uranium prices.

For various reasons, even if it were to happen, any new “Megatons to Megawatts program” would be relatively small, would be years in the future, and would be offset by increasing demand from end users amid growing realization that nuclear energy is the answer to the world’s energy problems. It is the cleanest, safest, most reliable, and lowest cost form of energy.

It must be emphasized that the decline in the uranium price is due to the spot price, which is far less significant than contract prices. Most uranium is sold on long-term contracts, since for the power plant end user, reliability of supply is more important than price.

A year ago, the spot price moved far above the contract price amid heavy speculation. As that speculative buying has unwound, the spot price is now back more-or- less to where contracts are priced, and attractive buying level once again. It should also be noted that the current uncertainty about tariffs has led to a slowdown in new contracts being signed. The need for the material remains, however, and we expect to see a pick-up in new contracts, which should see prices firm.

Overall, we are cautious about U.S. and major developed market financial assets, preferring to find attractive holdings mostly in smaller companies and smaller markets, always on a bottom- up approach. At the same time, we are increasing exposure to the commodity space, holding gold exposure while broadening the range of resources held. On balance, we expect to see cash holdings increase over the next few months as uncertainly increases.

Review of Individual Accounts

Global Accounts:

We have lowered our cash holdings in most accounts (though more conservative global accounts still have over 11% cash) as we took advantage of recent declines in global stock markets and topped up resource exposure.

Though we employ a bottom-up approach to stock picking, our largest exposures continue to be in Hong Kong and Singapore as we continue to reduce exposure to the U.S. market, including further trimming of Business Development Companies, which nonetheless remain a large holding for most accounts.

We exited a British banknote printer after a strong rally amid takeover activity. We also trimmed many stocks for various clients, depending on risk tolerance, cash levels, and overall portfolio weightings.

Adding to Japan:

With proceeds, we added to some Japanese companies in particular; the entire market seems ready for a move. And we bought two new companies, an intriguing property developer in southern Manhattan, and an innovative finance company, based in Canada, but operating both there and in the U.K. The long-term prospects for both are attractive.

Going forward, we expect to raise cash as we will be a little quicker to take profits in the current uncertain outlook, but will as always continue to look globally for quality companies that are undervalued. All global accounts retain high exposure to resources, particularly gold.

Gold Accounts:

Our gold accounts remain fully invested, with the same broad allocations to the different groups in the gold space. Allocation to large miners and senior royalty companies increased to 30% of accounts, as we added to some of the best companies for underweight accounts. The allocations to silver and exploration remained at little less than one-third each, with the rest to intermediate companies.

Other than a couple of small companies owned by few clients, we did not exit any holdings this quarter. Most of our selling was reducing positions to an intermediate that had rallied and to a large but trouble development company in Nevada. Otherwise, we trimmed various positions for different clients on rallies, mostly for clients overweight in a particular stock.

This provided us with cash to add a couple of smaller companies — a developer in an attractive part of Ontario and potential takeover target; and an exploration company in the high-potential southern Andes.

In addition, we added extensively to a U.S. company looking to bring back into production the U.S.’s most prolific historic gold mine, the Homestake mine.

Looking forward, we expect to remain fully invested, with a continued emphasis on larger, high-quality miners and royalty companies. We will continue to trim overweight positions, giving accounts cash with which to buy new opportunities. As the market develops, we will increase allocation to intermediates and smaller companies which tend to have higher potential, but usually have their strongest moves as the market matures.

Resource Accounts:

Our resource accounts are also fully invested, with gold, copper, and silver continuing to be our largest exposures. We are underweight oil and gas, but continue to add slowly to quality names on weakness, mostly in the intermediate size companies, and are also, once again, accumulating uranium holdings.

This quarter we had no wholesale sells, though did, as always, trim some positions for select clients. With cash, we added one copper company — returning to it again on stock price weakness — and have also been adding aggressively to a company with an advanced copper exploration project in Arizona.

Looking ahead, we expect to remain fully invested, with gold, copper and silver continuing to be our top individual resources, though we are also accumulating uranium again after a significant decline. Our focus is on resources with supply constraints in addition to demand growth.

In sum, with the increased uncertainly in the political and economic outlook amid a possible restructuring of the global monetary system, as the U.S. careens towards a funding crisis, it is time to be more defensive, to reduce exposure to the U.S. equity and bond markets, and increase exposure to uncorrelated global markets; to defensive stocks; and to commodities, particularly gold.

* Please note: Past performance is no guarantee of future results. For complete information on our past performance, including factors to be considered in viewing past performance and other disclosures, please contact our office. Specific stocks mentioned herein are intended solely as illustrative of strategies and types of stocks we are buying or selling, and are not intended as indicative of entire portfolios or of any individual client’s portfolio. The numbers mentioned represent our composite averages. They represent all accounts that fall within the stated objectives which have the ability to buy and sell options; they exclude accounts under $25,000 and accounts with significant limitations or restrictions that would make them unrepresentative of the account type. Performance figures for composites reflect the deduction of administrative fees, but do not take into account any performance fee that may be charged for the period stated.

The performance of any individual stock or stocks does not take into account fees. Performance numbers include dividends; dividends are not reinvested. Commissions charged may vary depending on the brokerage firm at which an individual account is held. All accounts are managed individually and are therefore different, even within the same broad objective. Factors such as an individual’s circumstances, the size of the portfolio, and the time the account opened can affect specific buy and sell decisions. Factors such as price movements and security liquidity can affect whether any trade is made for all accounts. Global Strategic Management, an SEC-registered investment advisor, does business as Adrian Day Asset Management.

 

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Disclosure: Adrian Day Asset Management (“ADAM”) is an SEC-registered investment adviser located in San Juan, Puerto Rico. ADAM and its representatives are in compliance with the current filing requirements imposed upon SEC-registered investment advisers by those states in which ADAM maintains clients. ADAM may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. (Note: Global Strategic Management, our legal name, is registered, or qualified to accept clients from all states and territories, including the District of Columbia.) A direct communication by ADAM with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of ADAM, please contact the SEC or the state securities regulators for those states in which ADAM maintains a notice filing. A copy of ADAM’s current written disclosure statement discussing ADAM’s business operations, services, and fees is available from ADAM upon written request. (Note, all clients receive this document prior to opening and account and are offered it annually.) ADAM does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party and takes no responsibility therefor. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Past performance may not be indicative of future results. Therefore, there can be no assurance (and no current or prospective client should assume) that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended or undertaken by ADAM) made reference to directly or indirectly by ADAM will (i) be suitable or profitable for a client or prospective client’s investment portfolio or (ii) equal the corresponding indicated historical performance level(s). Different types of investments involve varying degrees of risk. Historical performance results for investment indices and/or categories generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, or the impact of taxes. (Note, any performance number provided for Adrian Day Asset Management accounts is after the deduction of all transaction costs and fees.) The material contained herein is provided for informational purposes only and does not constitute an offer to buy or sell or a solicitation of an offer to buy or sell any option or any other security or other financial instruments. Certain content provided herein may contain a discussion of, and/or provide access to, ADAM’s positions and/or recommendations as of a specific prior date. Due to various factors, including changing market conditions, such discussion may no longer be reflective of current position(s) and/or recommendation(s). Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from ADAM, or from any other investment professional. ADAM is neither an attorney nor an accountant, and no portion of the content provided herein should be interpreted as legal, accounting, or tax advice. Rankings and/or recognition by unaffiliated rating services and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if ADAM is engaged, or continues to be engaged, to provide investment advisory services, nor should it be construed as a current or past endorsement of ADAM by any of its clients. Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser.

Metals Opinions
09 Apr

The trade deficit isn’t an emergency – it’s a sign of America’s strength

By Tarek Alexander Hassan, Boston University 

When U.S. President Donald Trump imposed sweeping new tariffs on imported goods on April 2, 2025 – upending global trade and sending markets into a tailspin – he presented the move as a response to a crisis. In an executive order released the same day, the White House said the move was necessary to address “the national emergency posed by the large and persistent trade deficit.”

A trade deficit – when a country imports more than it exports – is often viewed as a problem. And yes, the U.S. trade deficit is both large and persistent. Yet, as an economist who has taught international finance at Boston University, the University of Chicago and Harvard, I maintain that far from a national emergency, this persistent deficit is actually a sign of America’s financial and technological dominance.

The trade deficit is the flip side of an investment magnet

A trade deficit sounds bad, but it is neither good nor bad.

It doesn’t mean the U.S. is losing money. It simply means foreigners are sending the U.S. more goods than the U.S. is sending them. America is getting more cheap goods, and in return it is giving foreigners financial assets: dollars issued by the Federal Reserve, bonds from the U.S. government and American corporations, and stocks in newly created firms.

That is, a trade deficit can only arise if foreigners invest more in the U.S. than Americans invest abroad. In other words, a country can only have a trade deficit if it also has an equally sized investment surplus. The U.S. is able to sustain a large trade deficit because so many foreigners are eager to invest here.

Why? One major reason is the safety of the U.S. dollar. Around the world, from large corporations to ordinary households, the dollar is used for saving, trading and settling debts. As the world economy grows, so does foreigners’ demand for dollars and dollar-denominated assets, from cash to Treasury bills and corporate bonds.

Because the dollar is so attractive, the Federal Reserve gets to mint extra cash for use abroad, and the U.S. government and American employers and families can borrow money at lower interest rates. Foreigners eagerly buy these U.S. financial assets, which enables Americans to consume and invest more than they ordinarily could. In return for our financial assets, we buy more German machines, Scotch whiskey, Chinese smartphones, Mexican steel and so on.

Blaming foreigners for the trade deficit, therefore, is like blaming the bank for charging a low interest rate. We have a trade deficit because foreigners willingly charge us low interest rates – and we choose to spend that credit.

US entrepreneurship attracts global capital – and fuels the deficit

Another reason for foreigners’ steady demand for U.S. assets is American technological dominance: When aspiring entrepreneurs from around the world start new companies, they often decide to do so in Silicon Valley. Foreigners want to buy stocks and bonds in these new companies, again adding to the U.S. investment surplus.

This strong demand for U.S. assets also explains why Trump’s last trade war in 2018 did little to close the trade deficit: Tariffs, by themselves, do nothing to reduce foreigners’ demand for U.S. dollars, stocks and bonds. If the investment surplus doesn’t change, the trade deficit cannot change. Instead, the U.S. dollar just appreciates, so that imports get cheaper, undoing the effect of the tariff on the size of the trade deficit. This is basic economics: You can’t have an investment surplus and a trade surplus at the same time, which is why it’s silly to call for both.

It’s worth noting that no other country in the world enjoys a similarly sized investment surplus. If a normal country with a normal currency tries to print more money or issues more debt, its currency depreciates until its investment account – and its trade balance – goes back to something close to zero. America’s financial and technological dominance allows it to escape this dynamic.

That doesn’t mean all tariffs are bad or all trade is automatically good. But it does mean that the U.S. trade deficit, poorly named though it is, does not signify failure. It is, instead, the consequence – and the privilege – of outsized American global influence.

The president’s frenzied attacks on the nation’s trade deficit show he’s misreading a sign of American economic strength as a weakness. If the president really wants to eliminate the trade deficit, his best option is to rein in the federal budget deficit, which would naturally reduce capital inflows by raising domestic savings.

Rather than reviving U.S. manufacturing, Trump’s extreme tariffs and erratic foreign policy are likely to instead scare off foreign investors altogether and undercut the dollar’s global role. That would indeed shrink the trade deficit – but only by eroding the very pillars of the country’s economic dominance, at a steep cost to American firms and families.The Conversation

About the Author:

Tarek Alexander Hassan, Professor of Economics, Boston University

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

 

Economics & Fundamentals Opinions
09 Apr

Tariffs on US imports come into effect today. The RBNZ expectedly lowered the rate by 0.25%

By JustMarkets 

The Dow Jones Index (US30) was down 0.84% at Tuesday’s close. The S&P 500 Index (US500) was down 1.57%. The Nasdaq Technology Index (US100) decreases by 1.95%. President Trump’s announcement that tariffs on Chinese imports will rise to 104% starting tomorrow was a strong move toward protectionism. It heightened fears of a protracted economic conflict between the world’s largest economies. The move sparked widespread risk aversion and accelerated capital outflows from trade-dependent economies.

The Canadian dollar strengthened to $1.41, approaching a four-month high on April 3, as investors assess Canada’s relative defensiveness against tough new US tariffs. Signals that Canada will largely remain free of expanded duties under the USMCA have helped ease trade fears, and ongoing international tariff negotiations continue to provide support. Domestically, Canadian business confidence remains resilient, as evidenced by the Ivey PMI holding above 50, but continued vulnerability in key sectors.

The Mexican peso fell to 20.9 per US dollar, the weakest since March 2022, as a sharp escalation in the trade war between the US and China shook global markets and increased pressure on emerging economies such as Mexico, where external demand and US growth are critical pillars.

Equity markets in Europe were mostly up on Tuesday. Germany’s DAX (DE40) rose by 2.48%, France’s CAC 40 (FR40) closed 2.50% higher, Spain’s IBEX 35 (ES35) gained 2.37%, and the UK’s FTSE 100 (UK100) closed 2.71% higher. European stocks bounced back on Tuesday after the worst four-day drop since the pandemic, sparked by concerns over US tariffs. The rebound was fueled by optimism that the US may soften its stance on tariffs as negotiations are underway. However, despite the recovery, trade tensions remain elevated. EU officials have said they are prepared to take a wide range of retaliatory measures, including possible digital taxes, and have warned of 25% tariffs on selected US goods. Trump has rejected a proposed zero-for-zero agreement on industrial tariffs, keeping tensions high.

On Tuesday, WTI crude futures fell more than 3% to below $59 a barrel, a four-year low, as President Trump confirmed that tariffs on China will rise to 104% from Wednesday, adding to fears of a global recession. While hopes briefly rose on reports that the US may reduce or eliminate tariffs with some countries, including South Korea, lack of progress in broader trade talks and escalating tariffs caused markets to reassess the outlook for global demand. Additional pressure came from a planned OPEC+ production increase in May, price cuts by Saudi Arabia, and rising geopolitical tensions, including Trump’s comments on direct talks with Iran.

Asian markets were predominantly down yesterday. Japan’s Nikkei 225 (JP225) gained 6.03% yesterday, China’s FTSE China A50 (CHA50) added 2.09%, Hong Kong’s Hang Seng (HK50) bounced 1.51% and Australia’s ASX 200 (AU200) was positive 2.27%.

The Reserve Bank of New Zealand cut the official money rate by 25 bps to 3.5% for the fifth consecutive meeting, citing a steady decline in inflation and weakening domestic economic conditions. The Central Bank also warned of the risks of weakening competitiveness of New Zealand’s export-oriented economy due to global trade barriers. In addition, the currency remains vulnerable to concerns that US President Donald Trump’s tariff policies could cause economic damage globally, especially to China, New Zealand’s largest export market.

The Reserve Bank of India (RBI) cut its key repo rate by 25 bps to 6% at its April meeting, marking consecutive rate cuts of the same magnitude and in line with market expectations. On the economic outlook, the RBI slightly lowered its GDP growth projections for FY 2025/26 to 6.5% from 6.7%. The quarterly growth expectations are 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4. The inflation estimate has been revised downward to 4% from 4.2%, remaining within RBI’s target range of 2-6%.

S&P 500 (US500) 4,982.77 −79.48 (−1.57%)

Dow Jones (US30) 37,645.59 −320.01 (−0.84%)

DAX (DE40) 20,280.26 +490.64 (+2.48%)

FTSE 100 (UK100) 7,910.53 +208.45 (+2.71%)

USD Index 102.97 −0.29 (−0.29%)

News feed for: 2025.04.09

  • New Zealand RBNZ Interest Rate Decision at 05:00 (GMT+3);
  • New Zealand RBNZ Rate Statement at 05:00 (GMT+3);
  • Mexico Inflation Rate (m/m) at 15:00 (GMT+3);
  • US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
  • US FOMC Meeting Minutes at 21:00 (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
09 Apr

Dumb, Dumber and Dumbest: The Three Rounds of the Trump Tariff Wars

Dr. Dan Steinbock 

In just days, President Trump has caused a meltdown in world markets and undermined global recovery, as he did in 2017. But now his economic weapons are far more destructive, as evidenced by the three rounds of the tariff wars.

The first round of Trump tariffs, which still built on traditional trade wars, involved mainly Canada, Mexico and China. The second round began with “reciprocal tariffs”, which are unilateral, flawed as stated and wrongly calculated. This round covers most trading economies worldwide. But the trade wars will drastically escalate by Trump’s threat of additional 50% tariff against China.

If the first round was dumb, the second was dumber, and the third is most certainly the dumbest. The first round was dumb because it was unwarranted and driven by geopolitics, not economics. The second round was dumber because it was based on flawed formula which has no basis in either economic theory or trade law. Worse, thanks to erroneous calculation, it over-inflated the tariff impact by up to a factor of four, as demonstrated by the American Enterprise Institute (AEI).

Even if the Trump “reciprocal tariffs” were to be taken seriously, which would be a cardinal mistake, the tariff against Vietnam should be 12%, not 46%; against China, 10% not 34%; against the EU, 10% not 20%, and so on (see Figure).

 

Figure: President Trump’s “Reciprocal Tariffs”: Actual and Corrected

Source: AEI; author

 

The third round is the dumbest because it builds on unwarranted tariffs, flawed reciprocal tariffs calculated erroneously and, finally, still new tariffs that have more in common with economic blackmail than international cooperation.

President Trump mistakes “medicine” with poison and “negotiations” with paying tribute.

The pre-104% tariff impact on China

What is the impact on China of the accumulative tariffs regarding China (now tariffs above 60%) and the elimination of duty-free for de minimis?

The direct impact of the current US tariffs could shave off up to 1.0% to 1.2% from China’s GDP. This is at par or 20% higher than the initially expected impact. However, it is not the actual impact of the US tariffs.

During Trump’s first term, the tariff war targeted primarily China and a few other trading economies. Now it targets most if not all non-US economies. To a degree, this will reduce the adverse impact on China. Moreover, China is prepared to cushion the US tariff impact in part by fiscal stimulus, monetary easing and structural reforms.

For all practical purposes, the US administration’s decision to eliminate duty-free de minimis treatment for low-value imports seeks to undermine Chinese global low value e-commerce platforms. Yet, these players, including Shein and Temu, are already working with more US sellers and opening warehouses in America.

But the move will prove costly to those Americans who are most reliant on affordable prices. It will hit the hardest American small businesses, the shrinking US and lower-middle-class and particularly working Americans and the laboring poor.

Toward a “global economic pandemic”

How would you evaluate the Chinese retaliation decisions?

Last week, the Trump administration imposed a 34% tariff on Chinese goods, following the 20% rate imposed earlier in the year. Two days later, China imposed a 34% tariff on all U.S. imports. It is a part of China’s full retaliatory package, which includes a 15% tariff on certain US agricultural commodities and 10% on others in March. Additionally, China added 16 US entities to its export control list and another 11 firms into its unreliable entity list, plus import restrictions on rare-earth products.

Relative to the Trump administration’s overblown “reciprocal tariff” measures, China’s responses have been measured, coordinated and broad. The Trump administration has now opened the Pandora’s Box of wholesale decoupling of the world’s two largest economies. That will penalize US consumer, business and investor confidence more than initially anticipated. In the process, the probability of an impending US contraction is likely to increase substantially.

If President Trump will carry out his threat to raise the tariff on Chinese goods by an additional 50%, global economic prospects may face a new kind of global pandemic.

Death of outsourcing?

What about the extreme tariffs regarding Vietnam, Laos, Malaysia and Cambodia. Is this the end of the outsourcing model?

With the Trump administration’s uncertainty and weaponization of tariffs, it is premature to presume any final trajectories. The Trump administration is targeting Cambodia with 49%, Laos with 48%, Vietnam with 46% and Malaysia with 24% tariffs. Calculated right, these tariffs should be 13% to Cambodia, 13% to Laos, 12% to Vietnam and 10% to Malaysia. But Trump tariffs are devoid of economic rationality.

India was taken back by the US’s 26% reciprocal tariff, which exceeds the current tariff gap by more than 2.5 times. But Indian policymakers seek to avoid retaliation, hoping first to gain a bilateral trade agreement with the US and then lower the effective tariff rate.

The message is loud and clear: Those countries that are most exposed to the United States are now the most vulnerable to inflated, illicit and erratic trade measures.

The dissipation of almost $7 trillion in the US markets in just two days is a prelude to more extensive market losses and volatility. Such losses will translate to a broad and deeply adverse impact on the real economy.

How will Southeast Asia respond?

Why aren’t Southeast Asian states retaliating? 

The simple answer: By staying united. On Monday, Malaysian Prime Minister Anwar Ibrahim called for Southeast Asian countries to “stand firm together” after they were among the hardest hit by US tariffs. These words matter since Malaysia is this year’s rotating chair of the 10-member Association of Southeast Asian Nations (ASEAN). As Anwar put it, “We must stand firm together as ASEAN, with a population of 640 million and an economic strength that is among the top in the world.”

But Southeast Asia is very diverse. Exporters like Vietnam, Cambodia and Laos, even Thailand and Malaysia are taking disproportionate hits. More insular, large commodity producers like Indonesia are no longer immune. Advanced tiny states such as Singapore seek to hedge bets with cautious balancing. In the Philippines, the pro-US Marcos Jr dreams of trade exemptions, in exchange for geopolitical concessions.

For now, ASEAN nations are trying to avoid tit-a-tat tariffs against the US. But if US tariffs prevail and escalate, this stance will be harder to retain. Worldwide, US trade wars will reinforce regionalization; no longer globalization.

Would East Asian MNCs opt for “Americanization”?

Do you think the big Japanese, Taiwanese and South Korean multinationals will delocalize for US soil?

A full-scale “Americanization” of East Asian multinationals (MNCs) would make these companies even more exposed to future US tariff and non-tariff measures, which is very much not in the interest of these companies and the sovereign countries in which they are headquartered.

As the Taiwanese semiconductor giants have seen in the past few years, full localization in the US could undermine their technological competitiveness – which is precisely why President Trump and his trade authorities seek to localize those MNCs in America.

These East Asian MNCs are all US’s major non-NATO allies. So, when the Trump administration imposed 32% tariffs on Taiwan, 25% on South Korea and 24% on Japan, it came as a major surprise to each. And the timing is challenging. In Taiwan, domestic divides are on the rise. South Korea is heading to election amid a lingering constitutional crisis. Japan is struggling to keep its economic focus.

In the past, US military allies were seen as preferred trade partners and vice versa. That era is now gone. The ongoing trade wars are multidimensional. But so will be the responses.

Toward global contraction?

How do you see the next chapter of ongoing trade war between Trump and his adversaries? 

If President Trump will carry out his threat to raise the tariff on Chinese goods by an additional 50%, China will retaliate accordingly.

The Trump administration is not imposing tariffs. It seeks to charge economic rents it is not entitled to.

From the Chinese perspective, the Trump tariffs have little or nothing to do with economics, which most international economists would agree with. They regard those tariffs as blackmail and bullying, at the expense of the Global South.

Left unchallenged, the Trump tariffs will leave global economic integration unraveling.

About the Author:

Dr. Dan Steinbock is an internationally recognized strategist of the multipolar world and the founder of Difference Group. He has served at the India, China and America Institute (US), Shanghai Institutes for International Studies (China) and the EU Center (Singapore). For more, see https://www.differencegroup.net 

Economics & Fundamentals Opinions
08 Apr

Volatility in financial markets is insane. Oil fell to $60.7 per barrel

By JustMarkets 

At the end of Monday, the Dow Jones Index (US30) fell by 0.91%. The S&P 500 Index (US500) was down 0.23%. The Nasdaq Technology Index (US100) added 0.19%. The US stocks closed mostly lower on Monday as markets reacted to President Donald Trump’s escalating trade war with China, including a threat to impose additional 50% tariffs if Beijing does not back down from its retaliatory measures. Volatility rose across all asset classes: stocks, treasuries, and commodities were all buffeted by waves of conflicting headlines, including speculation of a 90-day tariff pause, which the White House quickly denied. The stock fell 20% over the week because of the company’s heavy reliance on China, where tariffs have reached 54%. Base tariffs of 10% on all US imports went into effect on Saturday, and additional duties, including tariffs of 20% on imports from the European Union, will be imposed on Wednesday.

The Mexican peso (MXN) weakened to 20.7 per US dollar, nearing a three-year low amid escalating global trade tensions and persistent domestic inflation weighing on the currency. Despite initial gains from tariff exemptions under President Trump’s 10% measures on imports, the peso has been hit after China imposed retaliatory 34 percent tariffs on US goods, adding to fears of a global recession and weakening external demand. The setback has been compounded by growing uncertainty over potential tariffs on US automobiles and deteriorating domestic indicators, including a sharp drop in consumer confidence in March and the ongoing challenge of high inflation.

The Canadian dollar weakened to $1.42, retreating from a recent four-month high, amid growing foreign trade uncertainty and signs of a fragile domestic economy. A sharp drop in crude oil prices to a four-year low has weighed on the commodity-linked Lonnie, as oil remains a key export for Canada. Political uncertainty ahead of the April 28 snap election further adds to risk aversion.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) was down 4.13%, France’s CAC 40 (FR40) fell by 4.78%, Spain’s IBEX 35 (ES35) lost 5.12%, and the UK’s FTSE 100 (UK100) closed down 4.38%. European stocks fell for a fourth straight session on Monday, following a global equity sell-off triggered by President Trump’s latest tariff announcements. Sectors such as utilities, retail, insurance, financial services, oil and gas, and chemicals all fell more than 5%.

WTI crude futures reversed previous gains and fell to $60.7 a barrel, at its lowest level since April 2021, after speculation of a 90-day pause in new US tariff policy proved false. Investors remain on edge amid heightened volatility, fearing an escalating trade war could curb global growth and weaken energy demand.

Asian markets were predominantly down yesterday. Japan’s Nikkei 225 (JP225) was down 7.83%, China’s FTSE China A50 (CHA50) fell by 6.02%, Hong Kong’s Hang Seng (HK50) collapsed 13.22%, and Australia’s ASX 200 (AU200) was negative 4.23%.

The Australian dollar climbed above $0.60 on Tuesday after a sharp two-day drop amid improving market sentiment after US President Donald Trump signaled a willingness to engage in trade talks with key partners, fueling hopes of easing global trade tensions. US Treasury Secretary Scott Bessent added that about 70 countries have approached the White House to negotiate tariffs. However, trade tensions between the US and China remained elevated after Trump threatened to impose an additional 50% tariffs on Chinese imports. Beijing denounced the move as “blackmail” and vowed to defend its interests.

Indonesian consumer prices rose by 1.03% y/y in March 2025, reversing a 0.09% decline in the previous month but falling short of market consensus, which expected a 1.16% rise. This was the highest since December amid a rebound in spending during the Lenten month and ahead of the Eid al-Fitr holiday. Core inflation, which excludes food prices, came in at a 20-month high of 2.48%, below the 2.50% expectations.

S&P 500 (US500) 5,062.25 −11.83 (−0.23%)

Dow Jones (US30) 37,965.60 −349.26 (−0.91%)

DAX (DE40) 19,789.62 −852.10 (−4.13%)

FTSE 100 (UK100) 7,702.08 −352.90 (−4.38%)

USD Index 103.47 +0.45 (+0.43%)

News feed for: 2025.04.08

  • New Zealand NZIER Business Confidence (m/m) at 01:00 (GMT+3);
  • Australia NAB Business Confidence (m/m) at 04:30 (GMT+3);
  • Canada Ivey PMI (m/m) at 17:00 (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
08 Apr

Japanese Yen Recovers Some Losses as Investors Seek Safe-Haven Assets

By RoboForex Analytical Department 

The USD/JPY pair has stabilised around 147.60 following two consecutive days of gains, with the yen now attempting to recoup some of its recent losses.

Key factors influencing USD/JPY movements

Uncertainty in global trade relations remains a key focus for currency markets, heightening demand for safe-haven assets. Recent reports indicate that US President Donald Trump has agreed to meet Japanese officials to initiate trade discussions following a phone call with Prime Minister Shigeru Ishiba.

US Treasury Secretary Scott Bessent will lead the negotiations, underscoring the strength of the US-Japan alliance. Key topics will include tariffs, non-tariff barriers, foreign exchange policies, and government subsidies.

Despite Trump’s openness to dialogue, he has dismissed the possibility of delaying new reciprocal tariffs and warned that these measures could remain in place indefinitely. Domestically, Japan’s current account surplus for February reached a record high, buoyed by rising exports and declining imports, which has provided firm support for the yen.

Technical outlook: USD/JPY

H4 Chart: The pair achieved its local downside target at 144.50 before correcting to 148.12. Following this correction, we anticipate another potential decline towards 143.83. This scenario is supported by the MACD indicator, where the signal line remains below zero and points sharply downward.

H1 Chart: The pair completed an upward structure, reaching 148.12, and is now consolidating below this level. We expect a new downward wave towards 146.27, with further downside potential to 143.83. The Stochastic oscillator confirms this outlook, with its signal line below 50 and trending firmly downward towards 20.

 

Conclusion

The yen’s recovery reflects ongoing market caution, with technical indicators suggesting further downside for USD/JPY. Investors will closely monitor trade developments and macroeconomic data for directional cues.

 

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
07 Apr

The sell-off in risk assets intensified as tariffs took effect

By JustMarkets 

The US economy added 228,000 jobs in March 2025, well above the downwardly revised 117,000 in February and above expectations of 135,000. This is the highest rate in the last three months. Despite the positive Non-Farm Payrolls report, all investors’ attention was focused on escalating trade tensions. At the end of Friday, the Dow Jones Index (US30) fell by 5.50% (-7.41% for the week). The S&P 500 Index (US500) was down 5.97% (-8.21% for the week). The Nasdaq Technology Index (US100) fell by 6.07% (-8.43% for the week). The decline in US markets intensified on Friday as China retaliated against President Donald Trump’s imposition of 10% import duties, adding to fears of a prolonged trade war. The S&P 500 Index fell nearly 9% for the week, the worst weekly drop since 2020, and global markets also fell hard. Trump’s tariffs, which will be expanded on April 9, are expected to reduce global trade, and some analysts have warned of recession risk. Over the weekend, President Trump continued to defend his tariff strategy, signaling on Truth Social that he is not worried about market turmoil. He argued that foreign investors are flocking to the US and insisted that his policies “will never change.”

Trump extended the deadline for ByteDance to sell its US operations to TikTok by 75 days, pushing it back to mid-June. The president said more time was needed to finalize approvals, but emphasized that national security issues remain. ByteDance has confirmed it is in talks with the US government, while Amazon.com Inc (AMZN), Oracle Corporation (ORCL), and Applovin Corp (APP) have expressed interest in acquiring the app’s US assets. Any updates on this front could add another layer of volatility to a market already plagued by geopolitical uncertainty.

The Canadian dollar (CAD) weakened to $1.42 amid signs of a fragile domestic economy and growing foreign trade uncertainty. Domestically, a loss of 32,600 jobs in March and a rise in unemployment to 6.7% indicate a weakening labor market, dampening the economic outlook. At the same time, crude oil prices — a key support for the commodity-linked Lonnie — fell more than 7%. With the Bank of Canada due to review its policy on April 16, expectations of a continued dovish stance amid recession fears intensified.

The Mexican peso (MXN) weakened to 20.5 per US dollar, nearing a three-year low of 20.85, which has been tested repeatedly since early 2025, as escalating global trade tensions and persistent domestic inflationary pressures reduce its appeal. At the same time, lingering uncertainty over Mexico’s potential exposure to US auto tariffs continues to cloud the outlook. Domestically, inflation remains uncomfortably high, complicating Banxico’s policy trajectory as it balances the need to maintain an attractive interest rate differential with the growing need to support slowing economic activity.

Equity markets in Europe were mostly down on Friday. Germany’s DAX (DE40) was down 4.95% (for the week -7.24%), France’s CAC 40 (FR 40) fell by 4.26% (for the week -7.32%), Spain’s IBEX 35 (ES35) lost 5.83% (for the week -6.08%), and the UK’s FTSE 100 (UK100) closed down 4.95% (for the week -6.97%). European stocks fell on Friday as investors recovered from new US tariffs and growing recession fears. Banks led the losses, plunged 8.5% after falling 5.5% on Thursday, amid concerns about slowing growth. EU officials said Friday that talks with the US were “frank” but warned that the bloc was “ready to defend interests” if necessary.

WTI crude prices fell 7.4% to $62 a barrel — the lowest level since August 2021 — after falling 6.6% the previous day amid growing concerns about a slowing global economy and weakening oil demand. Investor sentiment is increasingly weakened by an escalating trade war, especially with China’s impending imposition of 34% tariffs on US goods. Recession risks and uncertainty over global trade are adding to worries.

Asian markets were mostly down last week. Japan’s Nikkei 225 (JP225) was down 7.30% for the week, China’s FTSE China A50 (CHA50) lost 1.02%, Hong Kong’s Hang Seng (HK50) decreased by 3.48%, and Australia’s ASX 200 (AU200) was negative 3.94%. Shares in Hong Kong fell by 9.4% in early trading on Monday, marking a second session of sharp losses and hitting a two-month low. The collapse reflected widespread panic across all sectors as investors fled risky assets amid an escalating global trade war and rising recession fears.

Nominal wages in Japan rose by 3.1% year-on-year in February 2025, up from a downwardly revised 1.8% increase in January, in line with market expectations. While strong nominal wage growth has supported the BoJ’s recent move towards policy normalization, rising global uncertainty clouds the outlook for further interest rate hikes.

Vietnam’s annual inflation rate accelerated to 3.13% in March 2025 from February’s three-month low of 2.91%. The increase was driven by higher inflation in food and beverage services (3.83% vs. 3.31% in February).

S&P 500 (US500) 5,074.08 −322.44 (−5.97%)

Dow Jones (US30) 38,314.86 −2,231.07 (−5.50%)

DAX (DE40) 20,641.72 −1,075.67 (−4.95%)

FTSE 100 (UK100) 8,054.98 −419.76 (−4.95%)

USD Index 102.89 +0.82 (+0.80%)

News feed for: 2025.04.07

  • German Industrial Production (m/m) at 09:00 (GMT+3);
  • German Trade Balance (m/m) at 09:00 (GMT+3);
  • Eurozone Retail Sales (m/m) at 12:00 (GMT+3);
  •  Canada BOC Business Outlook Survey at 17:30 (GMT+3).

By JustMarkets

 

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

Economics & Fundamentals Financial News
06 Apr

Currency Speculators dropped their Bullish Bets before last week’s turmoil

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

Weekly Speculator Changes led by Australian Dollar

The COT currency market speculator bets were decisively lower this week (through Tuesday) as just one out of the eleven currency markets we cover had higher positioning while the other ten markets had lower speculator contracts.

Leading the gains for the currency markets was the Australian Dollar with a small gain of 1,583 contracts for the week.

The currencies seeing declines in speculator bets on the week were the EuroFX (-13,690 contracts), the British Pound (-9,657 contracts), the Mexican Peso (-7,959 contracts), the Swiss Franc (-5,171 contracts), the Japanese Yen (-3,602 contracts), the New Zealand Dollar (-3,481 contracts), the Brazilian Real (-3,314 contracts), Bitcoin (-688 contracts), the Canadian Dollar (-482 contracts) and with the US Dollar Index (-427 contracts) also registering lower bets on the week.

FX Roundup: Currency Speculators dropped their Bullish Bets before last week’s turmoil

Highlighting the COT currency’s data for last week was that the currency bets were overall down before last week’s late-week turmoil on the US tariffs announcement. The COT data is updated each week through Tuesday (released on Friday), so we only get a glimpse to what the speculators & commercials did before the Thursday & Friday selloffs.

The specs reduced their bullish bets across the board last week except for a small uptick in bets for the Australian dollar. The largest decreases were for the Euro, British Pound and the Mexican Peso — which were three currency positions that had been seeing recent speculator sentiment gains and had overall bullish net positioning. The Swiss Franc, the Yen, the NZD and the Brazilian Real saw more modest declines. The Australian Dollar saw a small rise but the overall AUD speculator position remains very bearish at a -76,863 net contract standing at the moment. It is hard to read into any of these moves because they could be and likely to be dwarfed by this coming week’s data and positioning changes.

The price action from last week was obviously dominated by the last two days which saw a giant whipsaw take place from Thursday to Friday. Thursday’s price action had strong bullish jumps for all the major currencies, except for the US Dollar Index, which took a huge hit by over -1.50 percent. The Yen, the Swiss Franc and the Mexican Peso led the way on Thursday with increases by over +2.0 percent each while the other majors saw gains in the neighborhood of +1.0 percent.

Friday, however, was a different story and everything pretty much reversed itself. The US Dollar Index led the way on Friday with a jump by approximately +1.0 percent. The next strongest currency turned out to be the safe haven Swiss Franc — which only fell by about -0.08 percent. The other (normally) safe haven Japanese Yen dipped by -0.32 percent and the Euro fell by -0.84 percent. After that, there was a sea of red with prices dropping for the other major much more sharply — the Aussie experienced a giant drop by -5 percent, the NZD by -3.85 percent, the Real by -3.78 percent and the Peso by -2.80 percent. The Canadian Dollar and British Pound saw declines each by over 1.00 percent.

Next week, to say the least, will be an interesting one after the market digests the recent news, retrenches and re-positions itself going forward. There is considerable risk the trends continue lower like Friday but there is a possibility that like the initial shock of Covid, some markets take a plunge and then turnaround again. Stay alert.

Currencies Net Speculators Leaderboard

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

Strength Scores led by Japanese Yen & Brazilian Real

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the Japanese Yen (96 percent) and the Brazilian Real (87 percent) lead the currency markets this week. Bitcoin (62 percent), Mexican Peso (55 percent) and the British Pound (52 percent) come in as the next highest in the weekly strength scores.

On the downside, the New Zealand Dollar (12 percent) and the Swiss Franc (14 percent) come in at the lowest strength levels currently and are in Extreme-Bearish territory (below 20 percent). The next lowest strength scores were the US Dollar Index (21 percent) and the Australian Dollar (22 percent).

3-Year Strength Statistics:
US Dollar Index (21.3 percent) vs US Dollar Index previous week (22.2 percent)
EuroFX (48.5 percent) vs EuroFX previous week (53.7 percent)
British Pound Sterling (51.7 percent) vs British Pound Sterling previous week (56.0 percent)
Japanese Yen (96.2 percent) vs Japanese Yen previous week (97.3 percent)
Swiss Franc (14.2 percent) vs Swiss Franc previous week (24.7 percent)
Canadian Dollar (29.7 percent) vs Canadian Dollar previous week (29.9 percent)
Australian Dollar (22.5 percent) vs Australian Dollar previous week (21.3 percent)
New Zealand Dollar (12.4 percent) vs New Zealand Dollar previous week (16.4 percent)
Mexican Peso (54.8 percent) vs Mexican Peso previous week (58.9 percent)
Brazilian Real (87.4 percent) vs Brazilian Real previous week (90.6 percent)
Bitcoin (62.0 percent) vs Bitcoin previous week (77.0 percent)

EuroFX & Brazilian Real top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the EuroFX (39 percent) and the Brazilian Real (34 percent) lead the past six weeks trends for the currencies. The Japanese Yen (19 percent), the Mexican Peso (19 percent) and Bitcoin (19 percent) are the next highest positive movers in the 3-Year trends data.

The US Dollar Index (-20 percent) leads the downside trend scores currently with the Australian Dollar (-14 percent) and the Swiss Franc (-9 percent) following next with lower trend scores.

3-Year Strength Trends:
US Dollar Index (-20.2 percent) vs US Dollar Index previous week (-16.2 percent)
EuroFX (39.3 percent) vs EuroFX previous week (49.5 percent)
British Pound Sterling (15.8 percent) vs British Pound Sterling previous week (21.3 percent)
Japanese Yen (19.2 percent) vs Japanese Yen previous week (22.2 percent)
Swiss Franc (-8.9 percent) vs Swiss Franc previous week (2.3 percent)
Canadian Dollar (6.6 percent) vs Canadian Dollar previous week (9.5 percent)
Australian Dollar (-13.6 percent) vs Australian Dollar previous week (-8.4 percent)
New Zealand Dollar (8.2 percent) vs New Zealand Dollar previous week (9.0 percent)
Mexican Peso (18.6 percent) vs Mexican Peso previous week (22.0 percent)
Brazilian Real (34.3 percent) vs Brazilian Real previous week (37.4 percent)
Bitcoin (18.7 percent) vs Bitcoin previous week (33.7 percent)

Individual COT Forex Markets:

US Dollar Index Futures:

US Dollar Index Forex Futures COT ChartThe US Dollar Index large speculator standing this week equaled a net position of 7,041 contracts in the data reported through Tuesday. This was a weekly decrease of -427 contracts from the previous week which had a total of 7,468 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 21.3 percent. The commercials are Bullish-Extreme with a score of 81.5 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 18.4 percent.

Price Trend-Following Model: Strong Downtrend

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

US DOLLAR INDEX StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:80.74.67.4
– Percent of Open Interest Shorts:56.726.49.6
– Net Position:7,041-6,397-644
– Gross Longs:23,6401,3402,164
– Gross Shorts:16,5997,7372,808
– Long to Short Ratio:1.4 to 10.2 to 10.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):21.381.518.4
– Strength Index Reading (3 Year Range):BearishBullish-ExtremeBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-20.221.0-10.8

 

Euro Currency Futures:

Euro Currency Futures COT ChartThe Euro Currency large speculator standing this week equaled a net position of 51,835 contracts in the data reported through Tuesday. This was a weekly fall of -13,690 contracts from the previous week which had a total of 65,525 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 48.5 percent. The commercials are Bullish with a score of 53.0 percent and the small traders (not shown in chart) are Bearish with a score of 42.2 percent.

Price Trend-Following Model: Strong Uptrend

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

EURO Currency StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:27.356.611.9
– Percent of Open Interest Shorts:19.668.97.3
– Net Position:51,835-82,87231,037
– Gross Longs:183,247379,41980,132
– Gross Shorts:131,412462,29149,095
– Long to Short Ratio:1.4 to 10.8 to 11.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):48.553.042.2
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:39.3-37.212.9

 

British Pound Sterling Futures:

British Pound Sterling Futures COT ChartThe British Pound Sterling large speculator standing this week equaled a net position of 34,626 contracts in the data reported through Tuesday. This was a weekly fall of -9,657 contracts from the previous week which had a total of 44,283 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 51.7 percent. The commercials are Bearish with a score of 46.0 percent and the small traders (not shown in chart) are Bullish with a score of 70.9 percent.

Price Trend-Following Model: Strong Uptrend

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

BRITISH POUND StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:56.126.916.2
– Percent of Open Interest Shorts:37.647.613.9
– Net Position:34,626-38,7904,164
– Gross Longs:104,98650,32030,248
– Gross Shorts:70,36089,11026,084
– Long to Short Ratio:1.5 to 10.6 to 11.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):51.746.070.9
– Strength Index Reading (3 Year Range):BullishBearishBullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:15.8-19.730.2

 

Japanese Yen Futures:

Japanese Yen Forex Futures COT ChartThe Japanese Yen large speculator standing this week equaled a net position of 121,774 contracts in the data reported through Tuesday. This was a weekly fall of -3,602 contracts from the previous week which had a total of 125,376 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 96.2 percent. The commercials are Bearish-Extreme with a score of 3.1 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 100.0 percent.

Price Trend-Following Model: Strong Uptrend

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

JAPANESE YEN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:51.931.215.5
– Percent of Open Interest Shorts:12.875.710.1
– Net Position:121,774-138,54716,773
– Gross Longs:161,56696,97148,102
– Gross Shorts:39,792235,51831,329
– Long to Short Ratio:4.1 to 10.4 to 11.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):96.23.1100.0
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBullish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:19.2-19.918.1

 

Swiss Franc Futures:

Swiss Franc Forex Futures COT ChartThe Swiss Franc large speculator standing this week equaled a net position of -42,764 contracts in the data reported through Tuesday. This was a weekly reduction of -5,171 contracts from the previous week which had a total of -37,593 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 14.2 percent. The commercials are Bullish-Extreme with a score of 80.6 percent and the small traders (not shown in chart) are Bearish with a score of 49.1 percent.

Price Trend-Following Model: Strong Uptrend

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

SWISS FRANC StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:4.683.811.4
– Percent of Open Interest Shorts:52.628.019.3
– Net Position:-42,76449,769-7,005
– Gross Longs:4,14374,79710,177
– Gross Shorts:46,90725,02817,182
– Long to Short Ratio:0.1 to 13.0 to 10.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):14.280.649.1
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-8.9-2.826.0

 

Canadian Dollar Futures:

Canadian Dollar Forex Futures COT ChartThe Canadian Dollar large speculator standing this week equaled a net position of -130,016 contracts in the data reported through Tuesday. This was a weekly decline of -482 contracts from the previous week which had a total of -129,534 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 29.7 percent. The commercials are Bullish with a score of 75.1 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 5.6 percent.

Price Trend-Following Model: Weak Downtrend

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

CANADIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:6.384.08.6
– Percent of Open Interest Shorts:53.032.513.4
– Net Position:-130,016143,318-13,302
– Gross Longs:17,606233,76023,892
– Gross Shorts:147,62290,44237,194
– Long to Short Ratio:0.1 to 12.6 to 10.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):29.775.15.6
– Strength Index Reading (3 Year Range):BearishBullishBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:6.6-3.2-18.4

 

Australian Dollar Futures:

Australian Dollar Forex Futures COT ChartThe Australian Dollar large speculator standing this week equaled a net position of -75,863 contracts in the data reported through Tuesday. This was a weekly lift of 1,583 contracts from the previous week which had a total of -77,446 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 22.5 percent. The commercials are Bullish with a score of 77.1 percent and the small traders (not shown in chart) are Bearish with a score of 40.4 percent.

Price Trend-Following Model: Strong Downtrend

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

AUSTRALIAN DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:14.365.313.5
– Percent of Open Interest Shorts:55.822.015.3
– Net Position:-75,86379,152-3,289
– Gross Longs:26,211119,37324,740
– Gross Shorts:102,07440,22128,029
– Long to Short Ratio:0.3 to 13.0 to 10.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):22.577.140.4
– Strength Index Reading (3 Year Range):BearishBullishBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:-13.611.20.9

 

New Zealand Dollar Futures:

New Zealand Dollar Forex Futures COT ChartThe New Zealand Dollar large speculator standing this week equaled a net position of -45,048 contracts in the data reported through Tuesday. This was a weekly lowering of -3,481 contracts from the previous week which had a total of -41,567 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 12.4 percent. The commercials are Bullish-Extreme with a score of 86.8 percent and the small traders (not shown in chart) are Bearish with a score of 30.0 percent.

Price Trend-Following Model: Strong Downtrend

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

NEW ZEALAND DOLLAR StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:13.681.84.4
– Percent of Open Interest Shorts:68.724.46.7
– Net Position:-45,04846,893-1,845
– Gross Longs:11,16466,8923,613
– Gross Shorts:56,21219,9995,458
– Long to Short Ratio:0.2 to 13.3 to 10.7 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):12.486.830.0
– Strength Index Reading (3 Year Range):Bearish-ExtremeBullish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:8.2-7.8-2.2

 

Mexican Peso Futures:

Mexican Peso Futures COT ChartThe Mexican Peso large speculator standing this week equaled a net position of 51,080 contracts in the data reported through Tuesday. This was a weekly lowering of -7,959 contracts from the previous week which had a total of 59,039 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 54.8 percent. The commercials are Bearish with a score of 48.4 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 17.4 percent.

Price Trend-Following Model: Weak Uptrend

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

MEXICAN PESO StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:62.231.43.1
– Percent of Open Interest Shorts:25.667.43.8
– Net Position:51,080-50,125-955
– Gross Longs:86,75743,8224,295
– Gross Shorts:35,67793,9475,250
– Long to Short Ratio:2.4 to 10.5 to 10.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):54.848.417.4
– Strength Index Reading (3 Year Range):BullishBearishBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:18.6-19.25.0

 

Brazilian Real Futures:

Brazil Real Futures COT ChartThe Brazilian Real large speculator standing this week equaled a net position of 37,035 contracts in the data reported through Tuesday. This was a weekly reduction of -3,314 contracts from the previous week which had a total of 40,349 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 87.4 percent. The commercials are Bearish-Extreme with a score of 10.4 percent and the small traders (not shown in chart) are Bearish with a score of 43.5 percent.

Price Trend-Following Model: Uptrend

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

BRAZIL REAL StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:54.234.34.4
– Percent of Open Interest Shorts:25.466.31.2
– Net Position:37,035-41,0504,015
– Gross Longs:69,59044,0655,617
– Gross Shorts:32,55585,1151,602
– Long to Short Ratio:2.1 to 10.5 to 13.5 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):87.410.443.5
– Strength Index Reading (3 Year Range):Bullish-ExtremeBearish-ExtremeBearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:34.3-36.515.4

 

Bitcoin Futures:

Bitcoin Crypto Futures COT ChartThe Bitcoin large speculator standing this week equaled a net position of 491 contracts in the data reported through Tuesday. This was a weekly fall of -688 contracts from the previous week which had a total of 1,179 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 62.0 percent. The commercials are Bullish with a score of 55.8 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 3.0 percent.

Price Trend-Following Model: Strong Downtrend

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

BITCOIN StatisticsSPECULATORSCOMMERCIALSSMALL TRADERS
– Percent of Open Interest Longs:86.33.34.0
– Percent of Open Interest Shorts:84.54.54.7
– Net Position:491-306-185
– Gross Longs:23,3739011,077
– Gross Shorts:22,8821,2071,262
– Long to Short Ratio:1.0 to 10.7 to 10.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):62.055.83.0
– Strength Index Reading (3 Year Range):BullishBullishBearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:18.7-11.1-28.6

 

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
05 Apr

Speculator Extremes: Live Cattle, Brent, 5-Year & Wheat top Bullish & Bearish Positions

By InvestMacro

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

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:

Live Cattle


The Live Cattle speculator position comes in as the most bullish extreme standing this week as the Live Cattle speculator level rose to a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 14.8 this week. The overall net speculator position was a total of 123,646 net contracts this week with a gain of 5,659 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.

Brent Oil


The Brent Oil speculator position comes next in the extreme standings this week after a spot at the 6th most bullish last week. The Brent Oil speculator level is now at a 96.4 percent score of its 3-year range.

The six-week trend for the percent strength score was 49.2 this week showing a sharp move higher. The speculator position registered -2,843 net contracts this week with a weekly boost by 3,685 contracts in speculator bets.

Japanese Yen


The Japanese Yen speculator position comes in third this week in the extreme standings after topping the list last week. The Japanese Yen speculator level resides at a 96.2 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 19.2 this week. The overall speculator position was 121,774 net contracts with a decline of -3,602 contracts in the weekly speculator bets.

Silver


The Silver speculator position comes up number four (same as last week) in the extreme standings this week. The Silver speculator level is currently at a 88.5 percent score over its 3-year range.

The six-week trend for the speculator strength score totaled a small gain of 3.5 this week. The overall speculator position was 57,258 net contracts this week with a dip by -3,692 contracts in the speculator bets.

Brazil Real


The Brazil Real speculator position rounds out the top five in this week’s bullish extreme standings. The Brazil Real speculator level currently sits at a 87.4 percent score over its 3-year range. The six-week trend for the speculator strength score was a strong 34.3 this week.

The speculator position totaled 37,035 net contracts this week with a reduction by -3,314 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

5-Year Bond


The 5-Year Bond speculator position comes in as the most bearish extreme standing again this week as the 5-Year Bond speculator level dropped to a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -14.8 this week. The overall speculator position was -2,021,677 net contracts this week with a drop of -121,590 contracts in the speculator bets.

Wheat


The Wheat speculator position comes in tied for the most bearish extreme standing on the week with the Wheat speculator level now at 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was strong -50.2 this week. The speculator position totaled -102,800 net contracts this week with a decrease by -20,252 contracts in the weekly speculator bets.

Soybean Meal


The Soybean Meal speculator position comes in as third most bearish extreme standing of the week. The Soybean Meal speculator level resides at a 5.1 percent score of its 3-year range.

The six-week trend for the speculator strength score was -13.4 this week while the overall speculator position was -54,300 net contracts this week with a decline of -5,022 contracts in the speculator bets.

Cotton


The Cotton speculator position comes in as this week’s fourth most bearish extreme standing. The Cotton speculator level is at a 12.3 percent score of its 3-year range.

The six-week trend for the speculator strength score was a modest -3.0 this week while the speculator position totaled -41,979 net contracts with a rise by 12,027 contracts in the weekly speculator bets.

New Zealand Dollar


Finally, the New Zealand Dollar speculator position comes in as the fifth most bearish extreme standing for a second straight week. The New Zealand Dollar speculator level is currently at a 12.4 percent score of its 3-year range.

The six-week trend for the speculator strength score was a positive 8.2 this week. The speculator position was a total of -45,048 net contracts with a decrease by -3,481 contracts in the weekly speculator bets.

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 Opinions Soft Commodities
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