Three cheers for the U.S. dollar
Last week the March 2010 U.S. dollar index had a weekly open at 7961 and closed the week at 8059½. Early in the week, the dollar did have some down days but got some fundamental help, especially from the Commercials, as you will see from the weekly chart below. The Commercials came in on Friday with a net-short position of -46,250 contracts, no doubt helping push the dollar over 80. Technically as you will see below the current uptrend is still solid even though Stochastics are well in overbought territory. A correction could be coming, but a trend change at this time is highly unlikely. If you want to know when this trend starts weakening, just look at the ADX numbers. Of course when the Commercials start liquidating their shorts you will then see additional weakening in this market. I would say that the dollar probably will start next week as it started last week, so do not lose focus. For a free report on exactly how to use the COT Report to catch trends please email me at Gary@CRBTrader.com with COT in the subject line. Please include your name in the email. If you are long the dollar like we are in the CRB TrendTrader you may want to adjust stops to lock in additional profits.
Charts below provided by www.pricecharts.com. 30-day trial click here!
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The numbers below represent the Commercial Net Traders positions taken from the weekly Commitment of Traders (COT) report released by the Commodity Futures Trading Commission each Friday. You will find a 12-month high and low with the past 2 weeks of data. To see the past 52 weeks of commercial data please visit www.pricecharts.com. Simply open Analysis under the Resource category at the top of the screen and click on the Commercial Tracker on the left side selection menu. You will find this to be a very interesting presentation of the commercial COT information.
Commercial Net Tracker instructions
This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A. If the current value is at a 12-month low, the cell will display a red/burgundy background. B. If the current value is at a 12-month high, the cell will display a green background. C. If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D. If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
| Commodity | 12-mo low | 12-mo hi | 5-Feb | 29-Jan |
| Cattle (feed) | -3,350 | 5,766 | 973 | 1,178 |
| Cattle (live) | -35,975 | 27,918 | -32,517 | -35,975 |
| Hogs | -26,361 | 35,452 | -15,821 | -24,224 |
| Corn | -133,074 | 81,644 | 26,445 | 17,812 |
| Oats | -4,608 | 2,198 | -1,237 | -1,550 |
| Soybeans | -112,075 | 24,820 | 24,820 | 11,849 |
| Soybean meal | -82,472 | -8,883 | -31,453 | -38,125 |
| Soybean oil | -55,029 | 20,995 | -2,856 | -3,846 |
| Wheat | -1,318 | 71,705 | 71,705 | 70,855 |
| Orange juice | -22,027 | 1,627 | -18,552 | -18,748 |
| Coffee | -40,805 | 265 | -21,529 | -31,168 |
| Cocoa | -49,897 | -11,214 | -43,055 | -49,897 |
| Sugar | -249,405 | -124,866 | -238,100 | -236,279 |
| Cotton | -58,803 | 16,051 | -29,459 | -37,139 |
| British pound | -1,717 | 76,698 | 43,534 | 33,035 |
| Canada dollar | -74,014 | 20,555 | -33,141 | -48,154 |
| Euro FX | -75,540 | 46,547 | 46,547 | 41,348 |
| Japanese yen | -66,127 | 32,258 | -2,068 | 8,239 |
| Swiss franc | -37,877 | 19,052 | 5,035 | -4,312 |
| US dollar index | -46,250 | 14,351 | -46,250 | -41,748 |
| Mexican Peso | -110,567 | 21,127 | -46,834 | -62,371 |
| Australian dollar | -83,309 | 6,468 | -45,836 | -60,063 |
| S&P 500 | -83,921 | -5,917 | -5,917 | -24,912 |
| T-note -10 yr | 15,365 | 236,194 | 140,775 | 200,375 |
| T-bond -30 yr | 38,327 | 151,338 | 123,498 | 132,494 |
| Eurodollar | -971,110 | -189,068 | -831,503 | -888,433 |
| Crude oil | -152,994 | 7,089 | -95,294 | -122,297 |
| Heating oil | -69,179 | -12,381 | -31,400 | -40,948 |
| Unleaded gas | -84,568 | -26,770 | -64,017 | -67,689 |
| Natural gas | 71,144 | 135,642 | 123,165 | 123,599 |
| Copper | -30,974 | 29,085 | -18,723 | -29,406 |
| Gold | -308,231 | -149,608 | -244,579 | -248,618 |
| Platinum | -27,079 | -8,610 | -22,632 | -22,552 |
| Silver | -66,004 | -25,171 | -46,563 | -54,711 |
To view the entire year of commercial data please visit www.pricecharts.com.
Fundamentals:
The dollar index extended its three-week ascent to a six-1/2 month high. The euro plunged to a seven-1/2 month low, while the dollar/yen continues to gyrate on either side of 90 yen, moderately above November’s 14-year low. Bullish factors for the dollar include (1) safe haven buying of dollars as “sovereign default fears” spread throughout Europe with the budget deficits of Portugal and Spain now joining Greece on concerns that the countries will struggle to finance their debt, which undermines confidence in the euro, and (2) comments from ECB President Trichet, who said that the economic outlook is subject to “uncertainty,” which signals the ECB has no immediate plans to tighten monetary policy. Undercutting the dollar was the warning from Moody's Investors Service that the U.S. government's Aaa bond rating will come under pressure unless measures are taken to reduce budget deficits for the next decade.
Recent global developments have battered the euro as it slumped to a seven-1/2 month low against the dollar and has now lost over 9% of its value in the past two months. In addition to concerns that the European Union will have to bail out Greece, speculation that economic growth will lag behind the United States and Japan and that the Eurozone’s debt load won’t return to pre-crisis levels for at least five years are also weighing down the euro. According to UBS, investors have spurned European stocks in favor of equities elsewhere for a record 19 straight weeks and drained a net $13 billion from the market. Unless confidence soon returns to the euro, investors may continue to diversify away from euro assets.
Legend:
CC - consecutive closes
UTL - uptrend line
DTL - downtrend line
Charts provided by www.pricecharts.com
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