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Anticipating This Week's Currency Drivers
Currency markets last Friday continued to digest Thursday's statement from ECB President Draghi, trying to glean how markets will be influenced by such changes. No doubt rumours will continue to swirl until we get confirmation of the ECB intentions, which will probably be finalized at the press conference scheduled in Frankfurt on Thursday August the 2nd.
During most of the euro debt crises, having been with us now for several years, the euro has strengthened in anticipation of the newest pending solution, only to fail once the details of the plan are announced. We don't know if this will again be the pattern, but what we do know is that the euro market was over loaded with bears, vulnerable to a short squeeze.
Initially we felt that the 1.23 handle would contain the rally, but the ease the market has moved through that resistance suggests there is more upside. We don't know if Draghi has any new tricks in his monetary bag, but we do suspect that another .25% rate reduction will occur.
The catalyst for the crises was the run up in the financing rates for the Spanish and the Italians. Italian ten year bonds are now back to a yield of 5.91%, and the Spanish ten year is in the 6.70 vicinity. The bond markets are anticipating the ECB will resume their version of QE, buying bonds in the secondary market, paying for them with shiny new euros.
Looking at the weekly EURUSD chart, the low was 1.2042, followed by an engulfing candle which has carried the market over the 1.2340 highs for the two previous weeks. It now looks like the 1.2300 to 1.2340 is the new support level.
All the right people are showing their solidarity and devotion to the future of the euro. Merkel and Hollande joined in a verbal defence of the euro last Friday. Longer-term, it will take more than words to fix the future of the eurozone when economic growth is slow- to non-existent, debt excessive, and public sectors too enlarged and intrusive to foster private sector growth.
Last Friday we received the US Advance GDP estimate. This came in at a positive 1.5%, down from the previous quarters 1.9% but slightly better than anticipated.
Today we get a glimpse of the austerity results on the Spanish economy. It is anticipated second quarter flash GDP on a Q/Q basis will be a negative 0.4%, contracting for the third quarter in a row. With Spanish unemployment now 24.6%, a bigger drop would not be a surprise. Remember three years of Greek austerity has reduced that economy by over 20%.
Unemployment numbers will be forthcoming next week. Tuesday we get the European unemployment rate, forecast to increase to 11.2% from the current 11.1%. On Friday the US unemployment rate will be released as will the always interesting Non-Farm Payroll Report. US unemployment is supposed to remain unchanged, at 8.2%. Estimates for the NFP report show the creation of 101K jobs, far less than the amount needed to reduce the unemployment rate in the US.
With Draghi apparently about to expand the portfolio of the ECB, and the consequent increase in the euro supply, will Bernanke not feel the pressure to follow? The economic news in the US gives Bernanke the cover to take such action now, but does he not open to Fed to later criticism? The US drought is reducing the crop size in the US, prices have risen at the wholesale level, and ultimately they are going to be passed along.
In addition to a plethora of economic numbers this week, we also commence the month of August. Can we anticipate some late Summer surprises this year?
Written by CashBackForex.com
Any opinions, news, research, analyses, prices, or other information contained in this post are provided as general market commentary, and do not constitute investment advice from CashBackForex.com.
Can the Canadian Dollar Again Trade at a Premium to the USD?
Once again the Canadian Dollar is firming versus the USD, challenging parity with the greenback.
Looking at the chart (below) there is a distinct channel starting from June 4th when the USD made a high of 1.0445 versus the loonie. From initiation of the channel we have a succession of C$ highs followed by spikes of USD strength. Clearly there is a pattern C$ strength, but once again we have approached parity, where there should be resistance.
The lengthy US/Canadian border and the North American free trade agreement has encouraged the big trade between the two countries. According to a recent Fact Sheet from the US State Department, there is a daily trade of $1.6B. Each day 300,000 people cross the Canadian/US border. The two countries supply electricity to each other, sharing a huge electrical grid. The US buys 70% of Canadian exports. The US is the largest investor in Canada, and Canada is the fifth largest investor in the US. Economically the two countries are bonded together.
Like many of the world's economies, the Canadian economy has been slowing. A recent report showed the Canadian economy had GDP growth on a m/m basis of only a plus 0.1% down from 0.3% in the prior month. This will cut the yearly Canadian growth to around 1.5%, respectable but not enough to cut the 7.2% unemployment rate.
The Canadian economy, according to most 2011 statistics, with a GDP of $1,737T, ranks tenth in the world, ahead of India, but behind Russia. Since the beginning of 2012, exports from Canada have been slowing, and the strong loonie may be one of the reasons.
For years Canadian manufacturers benefitted from their discounted currency, and the discounted currency resulted in many US companies moving facilities to Canada. Auto manufacturers moved into Canada and took with it the elevated wages of the United Auto Workers.
The North American Free Trade Agreement may have helped Canada, but not the Ontario auto workers. For 2011 Canada produced 2,134,893 vehicles, up 3.2%, but Mexico had a 14.4% increase in production, and produced 2,680,037 cars and trucks. With new plants coming on stream in Mexico as well as the non union southern part of the US, this trend continues. The days of ample $30/hr manufacturing jobs in Ontario may be ending.
Offsetting the decline in manufacturing activity in Canada has been mining, and oil and gas extraction. While this segment of the economy has been bright, prices have been soft. The US was formerly a busy buyer of Canadian gas, but because of the energy revolution in the US, gas prices are lower and the US has a natural gas surplus.
Oil demand from the US remains good, making a market for the oil sands production in Alberta. This is heavy oil which trades at a discount, far away from refineries, and requiring big transportation costs. Today for example, the spot West Texas Intermediate is trading at 88.42. The oil sands crude trades at a discount, at times, over $20/barrel. In June it traded as low as $40/ barrel. No wonder the Canadians want the Keystone pipeline to be constructed.
Global economic news does not favor expanding or robust economies. Until that reverses we doubt the C$ has much more to gain on the USD. Further, should the Chinese or European difficulties worsen, what are the chances energy prices could sell off. The end of the North American peak driving season often signals lower energy prices.
We prefer the short side of the C$ versus the USD at these levels, risking 75 points. Should we get a perfect storm, poor economic numbers and deleveraging in the oil futures, this pair could trade at 1.04.
Any opinions, news, research, analyses, prices, or other information contained in this post are provided as general market commentary, and do not constitute investment advice from CashBackForex.com.
Written by CashBackForex.com
Any Market Surprises Coming at teh End of Quarter Three?
How many times do we get end of the quarter moves in markets simply because it is the end of an accounting period? A money manager who is paid a performance bonus computed at the end of the quarter might be tempted to add to winning positions, buying as high as possible near the close, to enhance the value of his positions, and his bonus.
This tactic has been around for years. I can remember, early in my trading career when I was filling orders in the Kansas City wheat pit, being told to do this. Near the close, my boss in New York would call, instruct me to run the market up on the close, but don't buy very much. Before I could respond, he would hang up, leaving me with a frustrating task. Now, with electronic trading, it is probably easier to "paint the tape" if you have different participants all going the same way.
There are other traders that only get their bonus on trades that have been closed. Consequently, there may also be some profit taking as we end the week.
The sell-in-May seasonal and go away did not work this year. Those who sold in May, fearful of being left out of the bull more, probably paid up to get back in. No one is more bullish than a sold out bull. The S&P 500 fooled many people as it staged a summer rally to 1468. Now as the unsettled conditions in Europe get more attention, the global markets are retreating. Is it possible there will be profit taking later this week?
Of the major world economies - Europe, the US, China and Japan - only the US appears to be muddling through. Come this week, the market will start to worry about another poor Non-Farm Payroll Report.
Yes, China's growth rate is now forecast at 7 or 8%, but can we trust the numbers, and how severe are the banking problems? Has the Zombie Bank franchise moved into China?
The Japanese economy has been slowing. The current Chinese-Japanese dispute over ownership of islands in the East China Sea, if it continues, will not be good for business in either country. Yes, there might be some oil or gas near these uninhabited islands, but the markets might get very queasy if the dispute grows. Remember, the US military is supposed to protect the Japanese interest.
In Europe Merkel says that "Europe must stay the course," as the demonstrations continue in Greece, Spain and Portugal. This stay the course advice may play well in Germany but with 10 to 25% unemployment from Greece to Portugal, best not venture to the Club Med countries and speak German.
Spanish bonds again topped 6% for ten year maturity Thursday September 27. Spanish PM Rajoy, to the dismay of the Germans, has yet to make the formal request for a bail out. Some say he wants to wait until Italy is in trouble, and together they can approach the Germans, hoping for better austerity terms.
Others believe Rajoy knows the bailout would be the end of his political career. Meanwhile, the PM was at the UN today, pleading for this esteemed body to examine the 1713 Treaty of Utrecht which gave Gibraltar to the British. It is great to have a leader with proper priorities. No doubt it is also great to be away from the Madrid riots today, enjoy some fine New York dining, without having rocks thrown at the window.
Octobers past have produced some hefty bear moves. Perhaps 2012 will not give us one, but is there any good reason to be long?
Written by CashBackForex.com
Any opinions, news, research, analyses, prices, or other information contained on this website are provided as general market commentary, and do not constitute investment advice from CashBackForex.com
Will the Loonie's Popularity Last?
USDCAD. If we can use the Canadian Dollar futures markets as a barometer, speculators have become quite bullish on the loonie. In our recent quarterly review of the volume changes in currency trading, we noted the remaining open interest in the C$ was 207K contracts when the September futures contract expired. This compares to only 97K open when the June futures expired.
The big buyers of the loonie have been speculators. In the last COT report, the specs net long had gone up to 139.3K. Trade in the Canadian Dollar is so popular that the open interest was - at 208K - only a little shy of the euro OI at 218K.
Speculator rationale for buying the loonie is straightforward. Canada, financially, is a well-managed country, and a producer of oil and other commodities. Globally, the big central bankers are going to increase liquidity which has bulled commodities in the past.
Since the middle of September, when markets were busy getting ready for helicopter Ben's next dosage of liquidity, both the C$ and the WTI oil have been drifting lower. The November WTI crude has sold off from 100/barrel at the beginning of the month to under 90/barrel this week. The USD versus the C$ was worth .9633 on the 14th and has since strengthened to about .9830.
With the end of the quarter upon us, will there be long liquidation?
The continued financial turmoil in Europe is negative for those buying the risk assets. In addition, this was followed Thursday September 27 with negative US economic reports. Core US Durable Goods (M/M) was a negative 1.6, and the total US Durable Goods was a negative 13.2%. Released at the same time was the (Q/Q) GDP Annualized at a positive 1.3%, down from the expected 1.7%. Friday 28 September, the University of Michigan Sentiment Report was a bit lower, and the Chicago Purchasing Managers Index fell sharply to below 50.
The economies of Canada and the US are 'joined at the hip', and Canada is much more than a commodity producer. Ontario, the big manufacturing providence reported labor negotiations were concluded this week between the Canadian Auto Workers and General Motors, Ford, and perhaps Chrysler.
When the C$ was a discount to the USD, many US companies moved their plants north. Now, with the currency advantage gone, so is the incentive to manufacture there. Chrysler claimed that Ontario auto manufacturing costs are the highest in the world. Since the Canadian plants produce their new best-selling Jeep and Dodge mid-size cars, Fiat will settle. But when the four-year contract ends, Fiat (Chrysler's owner) will likely follow others and move the production from high cost Ontario to the US South or Mexico.
There is another perplexing issue with Canada. If the oil sands are such a valuable resource, why are many of the original developers trying to sell their interests? Chinese and Indian companies have been buyers from the original developers, and Conoco Phillips, Shell, and Marathon may have more acreage to sell.
Currently, China's CNOOC is trying to acquire Nexen. Since Nexen also has leases on acreage in the US Gulf waters, this will be a political squabble.
A larger concern, though, is why some big players in the oil patch are reducing their exposure in the oil sands. Could it be that the recent advances in drilling technology represent a threat to the high-cost Alberta sands oil?
With the new technology, the results of the drilling are immediately transmitted, practically from the drill bit to a computer. Will this technology discover cheaper supplies of better quality oil?
The Canadian bond market has been a favorite destination for global bond buyers in recent years, and this has boosted the currency. Avery Shenfeld, the chief economist at CIBC World Markets, says:
"...that since 2007, international investors have purchased Canadian-dollar bonds worth $280-billion, compared with $65-billion over the previous five years.
That demand is partly explained by a healthy appetite for AAA-rated securities. But international investors also are buying Canada because they are being pushed out of other markets by interventionist central banks. Canada’s dollar is among the most overvalued in the world, Mr. Shenfeld said, citing calculations by the International Monetary Fund."
The AAA rated Canadian bonds has been a comforting place to invest when economic turmoil is plaguing so many countries. This helps the loonie, as does fear the eurozone may no longer be a safe place for currency reserves. This is what caused the rush to the C$, but the market is now overloaded long. If the IMF calculations are correct and the loonie is overvalued, it would not take much to push the loonie down to parity with the USD (USDCAD, FXE, UUP, UDN).
Written by CashBackForex.com
Any opinions, news, research, analyses, prices, or other information contained on this website are provided as general market commentary, and do not constitute investment advice from CashBackForex.com
Forex Markets Giving Mixed Signals
Last evening the bond rating company S&P reduced the ratings of Spanish sovereign debt toward the junk level. As might be expected, this proved bearish on the euro versus the USD, taking the pair down close to the 200-day SMA at 1.2825. Then it bounced and has since rallied to the 1.2940 area.
Why the rally? Some claim the Spanish downgrade is bullish on the euro because it hastens the day when Spanish PM Rajoy will throw in the towel, and surrender to Frankfurt's austerity rules.
This makes no sense. Why would such a move be euro friendly? Spain acquiesces to the Teutonic rules which, judging by the Greek example, causes an economic death spiral. As a reward for the new austerity rules, Draghi and the ECB will shower Spain with euros and bank credits, increasing the money supply. Such actions would be demeaning to the euro's value.
The Spanish PM is also objecting to what he perceives as a change in the terms of the June agreement. According to an Evans-Pritchardarticle in The Telegraph:
"This means sticking to its June summit deal to clean up legacy debts from banking crises in Spain and Ireland, preferably with a pan-EMU deposit insurance scheme.
Mr Rajoy and French president Francois Hollande seized on the warning, demanding the AAA core stands behind its pledge to let the ESM recapitalise Spain’s banks directly. “We have to show we’re serious people and that we do what we say we are going to do,” said Mr Rajoy. Germany, Austria, Finland, and Holland reneged on the accord two weeks ago ."
There is a meeting scheduled between the leaders of Spain, France, Italy and even Portugal. With the IMF now moderating it's views that the extreme austerity makes economics worse, the Mediterranean Club is headed for a conflict with the Northerners.
There are those who think that Spain, instead of jumping through all the hoops, might just leave the euro. This week, Matthew Lynnin his Column London Eye had some interesting comments:
"When will there be a Spanish bailout — a request for emergency aid from Prime Minister Mariano Rajoy that will trigger intervention by the European Central Bank to start buying on bonds on a massive scale?
But they may have missed the real story.
Instead of a bailout, there could be an opt out. In other words, the Spanish might decide to quit the euro rather than submit to the demands of an EU-led rescue package."
Spain does have a varied economy. Exports account for 27% of their GDP, about the same as either France or the UK. Much of the Spanish trade is to Latin America where the economies are growing faster than in Europe.
Perhaps overlooked is the diversity of the Spanish economy. For example, in 2011 combined car and truck production in Spain, at 2,353,682 exceeded the production in either France or Canada, Britain, or Italy. Here in Ireland, supermarkets are loaded with quality food products, as well as wine from Spain.
Spain has a massive real estate glut, and the Spanish bankruptcy laws are not conducive to reducing the price to a market clearing level. Change the price to pesetas rather than euros, and there would be a wealth of real estate and other business activity. It is probably best not getting too excited about a pending Spanish bailout request.
The rally in the euro has taken it back to the 1.2950 area where we suggested selling Wednesday. No change in ideas, but manage your money cause these markets are dancing around for no obvious reasons.
Crude oil, it seems, is being discovered in many places. Providence Resources from Dublin Ireland reported an oil field in the Celtic Sea which may have as much as 280 million barrels of reserves. Each platform with the new horizontal drilling techniques could pump 100,000 barrels a day. Ireland produces no oil, and consumes about 140,000 barrels a day. With petrol currently €1.70 a litre, let's get the drills going.
Any opinions, news, research, analyses, prices, or other information contained in this post are provided as general market commentary, and do not constitute investment advice from CashBackForex.com
Written by CashBackForex.com
Speculators Continue to Hold Big USD Short
Commitments of Traders (COT) Report, 16 October 2012. The most recent weekly COT report show that the specs are short the Euro, and they have even larger positions short the USD and long the commodity currencies (Canadian, New Zealand, and Australian Dollars). The position, long these three currencies, and short the USD, is 181,304 contracts.
The biggest USD short position is against the Canadian Dollar. The C$ has been weakening against the US during the past week but the short interest remains quite large.
Position in these currencies exceeds the size of the short euro versus the USD; that short Euro long the USD position was down to 73, 933 contracts from the preceding weeks' 86 ,511 contracts. During the early summer the short in the euro exceeded 230K.
There has also been a lively trade in the British pound. Specs are now long the pound and short the USD. The last tally has been 43,390 contracts, a small increase from the previous week.
The COT Report reflects a condensed version of currency traders collective market votes as derived from the U.S. Commodity Futures Trading Commission’s weekly data output. Any opinions, news, research, analyses, prices, or other information contained in this discussion post are provided as general market commentary, and do not constitute investment advice from CashBackForex.com
More Evidence of a European Slowdown
EURUSD. Reports Wednesday October 24 confirmed that the economic slowdown which has been plaguing the countries in Southern Europe is moving north. The German Manufacturing PMI (M/M) was down to 45.7 from 47.4 last month. The Services PMI slipped to 49.3 from last month's 49.7. Continuing, the German IFO Business Climate, Current Assessment, and Expectations surveys are reflected unchanged or negative expectations.
The following day, another report was released in Amsterdam by Heineken N. V. Their revenue grew at 7.1%, but they noted there was a "positive currency translational effect." This resulted in an earnings boost from profits in the Nigerian naira, the British pound, and the Mexican peso versus a weaker euro. For the nine-month period, the global volume of Heineken and their affiliates was higher; however, the exception was a 4% sales drop in Western Europe. Is it possible that slower beer sales is a leading indicator?
There is other data which suggests the Euro area debt crisis has become worse. The Eurostat reportedgovernment debt at the end of the 2nd quarter was 90% of GDP compared to 84.9% a year ago. The highest ratios of government debt to GDP were in Greece 150.3%, Italy 126.1%, Portugal 117.5% and Ireland 111.5%.
The biggest percentage increase in 2012 from the previous year's debt to GDP was 13.4%. This was in Greece, and should serve as an indictment how ineffective, perhaps destructive, the troika's austerity plan is.
For the euro, it looks like the Draghi rally, prompted by his claim he would do whatever it takes to save the euro, has run its course. The recovery top was established around 1.3170 in mid-September. After a retracement, the euro staged another rally but stalled at the 1.3140 area.
With the European debt crisis unresolved it is difficult to make a bull case for the euro. Wednesday, the euro rallied when the Greek finance minister said the troika auditors had approved the Greek austerity efforts and the next tranche of bail out money would be coming in November; this was denied by a German official and the euro then retreated.
Spanish banks have many problems. They hold billions of euros of bad real estate loans. The EU has provided a €100B which they insist are loans to the Central Government, and they would lend this money to the troubled banks. There are problems with this approach. The government debt-to-GDP ratio would rise beyond an accepted level for the Spanish government. Also the €100B is probably not enough to recapitalize all of the ailing banks. Further, there is no assurance the banks holding the bad paper will reduce prices to a level where the market will buy them. The real estate market cannot recovery until the price is written down to the current market level.
In Europe, there is no shortage of potential troubles that can hurt the euro. In addition to Greece and Spain, the French economy is contracting, and the capitalization of the French banks is in danger.
Political instability in Europe, with each new election, will remain a threat as long as the economy fails to recover. Though the seeds of the economic destruction may have been planted in years prior, current incumbent politicians will pay the price. Who knows what plans the new politicians will then bring to office?
It is easy not to be bullish on the euro, but this is hardly a reason to be USD-bullish. The US economy is slowly recovering. Last Thursday October 25, the monthly US Durable Goods was a positive 2%, better than expected.
But the growth rate at 1.5/2.0% is hardly good enough to increase employment and please the Fed's Bernanke. Until the US economy recovers, the Fed is going to continue with QE3 at the pace of at least $40B per month. This expansion of the Fed's balance sheet will increase the money supply, which, over time, depreciates the USD. Combine this with practically free money until 2015, there is then a big incentive to fund foreign investments with USD loans.
There are reasons to be bearish on both currencies: this probably implies we are going to move forward in a trading range. Support appears to be around the 200SMA which is about 1.2835, a level where you buy the EUR. Resistance should be around 1.3130 where you sell the EUR. Eventually we will break out of this range, but until, then best treat this as a pair, trapped in a trading range.
Any opinions, news, research, analyses, prices, or other information contained in this post are provided as general market commentary, and do not constitute investment advice from CashBackForex.com and/or CashBackForexUSA.com
GBPUSD, EURGBP - Technical and Markets Analysis
Will the recession blight spread to England next? This past week it was confirmed that the EU – with two consecutive negative quarterly GDP numbers – officially slipped into a recession. With the Brits' biggest trading block contracting, can the UK economy be far behind?
Had it not been for the London Summer Olympics, which provided a spurt of Summer economic activity, Britain might be on the cusp of another recession. Still, with the EU debt issues not going away, and the US only commencing to negotiate the resolution of the 'fiscal cliff', a British recession may have merely been delayed.
After the financial melt-down, following the Lehman collapse in 2008, and the subsequent election of the Conservative coalition, the new government embarked on conventional economic remedies. There were some tax increases and some attempted spending reductions, but no economic stimulants. The Bank of England increased the money supply with their version of quantitative easing but, to date, the recovery has lacked vigor.
Data released showed the yearly PPI was up 2.5%, a little higher than the 2% target. The UK Claimant Count Change showed the unemployed numbers increased by 10.1K, but the unemployment rate did go down a tick to 7.8%. UK retail sales were up 1.1% on a Y/Y basis but went down 0.7% in the latest month: there is nothing here that points to a rapid recovery.
According to our analysis of the COT currency reports, the speculators have fashioned the pound as a thing of beauty. They are currently long 33,281 futures contracts, although this is down from the 55.4K at the beginning of October. These contracts are traded in the US, so the pound long is by default a USD short.
So why, then, is the pound so popular?
It might be a bit simplistic, but the pound is a safe haven from the economic turbulence next door in the euro countries. In Britain, there is one central bank to respond to the country’s needs, while in the EU, the single central bank (ECB) serves many masters.
There is a single currency value in the EU, leaving the less efficient countries unable to use a lower currency value to be more competitive, be it products or tourist destinations.
Another British attraction is their real estate market. Recently, it was disclosed:
"U.K. properties returned 7.6 percent annually in the last 10 years, according to an Investment Property Databank index. That compared with 3.2 percent in Germany and 7.9 percent in the U.S.
At One Hyde Park, the U.K.’s most expensive residency complex, an investor from Kazakhstan bought a four-bedroom apartment for more than 25 million pounds last month, according to company data. People from 25 countries own apartments there."
Demand for London trophy real estate has been brisk. Many more high end flats are under construction, perhaps too many, but there appears to be no end of wealthy buyers. The result is a large capital movement into Britain that causes a demand for pounds.
Another sector that overcomes some of the economies deficiencies is the education business. During the 2010/11 academic year, there were 428,225 international students enrolled in Britain. The top five countries sending students to England were China 67,325, India 39,090, Nigeria, 17,585, Ireland 16,865, and Germany 16,265. For a country with only a 64 million population, this is a good size addition of people who need to buy pounds to finance their British education.
The GBPUSD chart does not tell me much. The USD has been gaining on the pound since the high of 1.63 made in late September but if there is a trade here, I fail to see it.
Looking at the pound versus the euro, the chart is more interesting. This has been a wide swinging market and Friday's action suggests there may be a return to the 79 handle. Earlier in the week, we voiced the opinion that euro might be making a bottom. The rally from midweek has been feeble, and the weekly chart now shows another failed bull move. Buying the pound and selling the euro with protection above the .8060 level looks like a way to cast a bearish euro bet.
Any opinions, news, research, analyses, prices, or other information contained in this post are provided as general market commentary, and do not constitute investment advice from CashBackForex.com and/or CashBackForexUSA.com
Currency Traders Reduced Positions
CFTC Commitments of Traders (COT) Report, published 08 January 2013 - Technical Analysis. Currency futures traders were busy reducing positions in the first week of the New Year. The collective reduction was 42K contracts but there was no liquidation in all contracts. Most of the liquidation came in the euro, pound and the yen. Specs did add to their long position in the A$ and the NZ$ resulting in increased OI in those two currencies.
The total USD short position was reduced to 165.9K from 183K in the previous week. The biggest reduction came in the DI contract when the specs flipped from a short to a long position resulting in a reduction of the short by 18.8K. The other significant reduction came from specs who reduced their long pound position.
The so-called commodity currencies continued to appeal to the specs. The total long went up to 212K contracts. There was additional buying in the C$, A$, and the NZ$.
The COT Report reflects a condensed version of currency traders collective market votes as derived from the U.S. Commodity Futures Trading Commission’s weekly data output. Any opinions, news, research, analyses, prices, or other information contained in this discussion post are provided as general market commentary, and do not constitute investment advice from CashBackForex and/or CashBackForexUSA
Eurozone's Merry Men Vote for Robin Hood. As You Wood.
Robin Hood: Are you with me? Yea or Nay? Villager: Well, which one means Yes? Robin Hood: Men in Tights (1993)
EU Approves Fnancial Trading Tax. Eurozone governments, always searching for new revenue sources, think a trading tax on financial transactions might be just the answer. Finance minister Germany, France, Italy and Spain as well as seven smaller countries voted for this tax. Abstaining were the UK, Luxembourg, and the Czech Republic.
Ireland, with a reported 25,000 people employed at the International Financial Services Centre in Dublin, according to the independent.ie, "kept a low profile." Well, that's our style, innit?
Under EU rules, a new tax can be introduced if nine or more countries approve to implement the tax, and they have permission from a majority of the 27 members. The tax would apply to only those who voted for the tax.
Elated Algirdas Semeta, the European commissioner for tax policy, said: "This is a major milestone in tax history," and Benoit Hamon, a French finance minister, added: "We will be able to put it into place quickly," during the celebration after the vote.