Feb 20 • Morning Roll Call • 3314 Views • Comments Off on MORNING ROLL CALL

COT report reveals further decrease in USA dollar bullishness, whilst PMI data for Europe and the UK’s GDP estimate form the basis of major news event for the weekbetween-the-lines1

The COT report provides an excellent medium to longer term barometer of sentiment with regards to the major currency peers. Published each Friday it’s always worth currency traders keeping aware of this report before considering any swing, or position trades against the prevailing trends.

The Commitment of Traders (COT) report, released by the Commodity Futures Trading Commission (CFTC) on Friday, revealed that large traders and currency speculators have continued to decrease their bullish bets for the USA dollar.

Large futures traders, hedge funds and large speculators, long positions in the USA dollar totalled $14.99b as of Tuesday February 14th, according to the CFTC data. This was a weekly reduction of $-2.08 billion, from the $17.07b registered the previous week, based on calculated totals of U.S. dollar contracts versus the combined contracts of: euro, sterling, yen, Aussie dollar, Canadian dollar and the Swissie.

Speculators have reduced their U.S.A. dollar bullish positions for the sixth week in series, representing the lowest level observed since October 11th. The dollar position is now under the +$20 billion position for the third week in series, after staying above the level of $20 billion for thirteen weeks up to January 24th.

Currencies which improved versus the U.S. dollar were: yen (3,776 weekly change in contracts), Swissie (3,137 contracts), Cad dollar (10,790 contracts), Aussie (7,470 contracts) and the Kiwi (1,031 contracts).

This week’s economic calendar begins slowly given that in the USA it’s bank holiday president’s day on Monday. Later in the week the FOMC minutes are published, together with a raft of Europe’s and USA PMI data and the UK’s second estimate of fourth quarter GDP.

UK data due in this week’s calendar includes the CBI Industrial Order Expectations and Public Sector Net Borrowing. On Monday the CBI data is predicted to remain static with a reading of 5. On Thursday the mortgage approvals from the UK’s banking association, is expected to reveal a slight drop to 41.9k, for the month of January.

The standout data for the UK’s economy in the week could be the public sector net borrowing requirement published on Tuesday, which is forecast to move into a surplus of -14.5b for the month of January. The BoE governor Mark Carney will speak in the UK’s parliament shortly after.

The UK’s GDP data published on Wednesday will be monitored carefully, it’s the second estimate for the fourth quarter of 2016, the expectation is for no change, from the preliminary reading of 0.6%.

The FOMC minutes from the last Federal Reserve policy meeting will be published on Wednesday. Whilst avidly analysed by investors and market commentators alike, the content has already been broadcast by way of Janet Yellen (the chair of the Fed) appearing before USA lawmakers last week to deliver her semi annual testimony. It’s therefore highly unlikely that any unforeseen: news, commitments, or data will be revealed.

There is an abundance of Markit PMI data published this week for: the Eurozone and the USA. These are flash readings for February, with all surveys published on Tuesday. The Eurozone’s February PMI report will be closely scrutinised. The January composite PMI was unchanged from December’s 54.4, the highest reading in over five years. In the USA manufacturing PMI is predicted to come in at 55.2, with service PMI estimated at 55.8, slight improvements from the previous readings.

The RBA (Reserve Bank of Australia), publishes its monetary policy meeting minutes from the February meeting on Tuesday, last the interest rate was held at 1.50%. The statement accompanying the policy announcement indicated that the monetary policy committee have little intention to raising rates in the medium term. Analysts will scour the minutes to determine any intent of rate cuts in the short term.

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