Research Excerpts

Watch The Smart Money In The US Dollar

Posted on: Thursday, September 11th, 2014

The following is a brief excerpt from our September Investor Sentiment Survey, one of 8 different reports that we provide for clients at various intervals through out the month (typically 3-4 reports per week).

In includes our analysis of a broad list of both asset flow- and survey-based measures of professional and retail investor sentiment, which focuses on their directional implications for the major areas of the US financial markets including the US stock market, US interest rates, the US Dollar, and commodity prices including copper, crude oil, and gold.

From Today’s Report:

Chart 4 measures investor sentiment on the US currency according to current net positioning by commercial hedgers in the CME euro contract via the Commitments of Traders data, which is compiled and published weekly by the Commodity Futures Trading Commission (CFTC). According to the CFTC, commercials are professional entities, often money center banks, that are holding large positions in the futures market to hedge their physical currency holdings in global currencies including the euro.

Commercial Hedger Positioning In The Euro

Commercial Hedger Positioning In The Euro

The highlighted area in the upper panel of the chart shows that these hedgers, who typically accumulate a net position against the trend, are holding a near-record net long (bullish) position on the euro. The green vertical highlights between both panels show that similar or lesser most bullish extremes by these “smart money” hedgers have coincided with or closely led every major bottom in the euro, and coincident top in the US Dollar, during the past decade.

continued in today’s report

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