The COT data for this week shows an increase in the cot index which is now starting to climb away from the extreme lows of the last few weeks, suggesting that we are now seeing the long awaited reversal in the Australian dollar, a move which is reflected in the spot market against many other currencies, of which the US dollar is typical. A look at the weekly chart for the Aussie dollar, reveals a double bottom over the last 6 months, with a breakout from this trading range now imminent, and with a wide spread up bar, the AUD/USD pair are poised to break through the resistance level at 0.7090.   However as always we need to bear in mind that the COT index is a direction indicator only, and not a timing indicator, and should only be used to reinforce or support our view of the spot market.

All the latest fundamental news is now available on the economic calendar, and if you are looking for the latest live price for the AUD/USD currency pair, then just follow the appropriate link. Finally, if you are looking for a good ECN broker I have provided some details on what to look for when choosing your broker.

As with silver the futures’ positions of the Commercials shows an expectation of further increases in the price of gold, a position which is likely to remain unchanged until we reach an extreme on the COT index approaching anywhere close to 100, assuming the current trend continues to build as we have seen over the past 20 weeks.   Again I must emphasise that this index is not a timing tool but merely reflects the sentiment of some of the biggest market players and you trade against them at your peril.

The Canadian Dollar continues to remain a long term buy despite last week’s temporary reduction in both long and short positions but still leaving the Commercials with a net long view of this currency.   A look at the monthly usd to cad candle charts would tend to support this bullish view of the Canadian dollar where this month’s candle will be a very long legged doji preceded by a series of tweezer tops.  Again I have to stress that the COT index is a long term sentiment indicator and wont always necessarily support the spot market picture.

The reversal in crude oil prices now seems to be in place, with the COT index moving firmly away from the extreme of two weeks ago, which suggested that we should see bullish trend starting in oil prices, which now seems to be the case in the daily oil price, as it breaks out from the sideways consolidation of the last few months, a moves above the $50 per barrel region. Supported by the moving averages this move now seems to have some momentum, and we should now see this reflected in the COT index for oil over the next few weeks.

The COT index for the Canadian Dollar is extremely interesting on several levels and in particular teaches us an important aspect of the patience required when interpreting the chart.  A quick comparison between the COT data and the spot market chart for the usd/cad highlights the fact that for the last 3 to 4 months we have seen sideways consolidation in the spot market with futures positions being built up at an extreme of the index.  It is clear from the COT chart that we are going to see a strengthening of the Canadian Dollar at some point but what is less clear is the actual timing of this event and as we can see we have had to wait several weeks for this view to emerge.  With the data now rising and seeming to build away from the extreme of the last 2 to 3 months we may finally be seeing the strengthening of the Canadian Dollar that has been threatening to take hold for some time.  In the spot market this has been translated into several failed attempts by the US dollar to penetrate the 1.3 region and more recently this has been coupled with a series of bearish signals.  So combining our spot market analysis with the COT index confirms the view that longer term we will see US dollar weakness and Canadian Dollar strength return.

All the latest fundamental news is now available on the economic calendar.