Sentiment-based Bias Grows Neutra

GBPJPY – The ratio of long to short positions in the GBPJPY stands at -1.05 as nearly 51% of traders are short. Yesterday, the ratio was at -1.10 as 52% of open positions were short. In detail, long positions are 3.5% higher than yesterday and 2.2% stronger since last week. Short positions are 1.6% lower than yesterday and 18.0% weaker since last week. Open interest is 0.8% stronger than yesterday and 12.0% below its monthly average. The fairly clear pullback in short positions gives us clear pause in our previously bullish bias. Indeed, our SSI-based forecast is accordingly neutral.

British Pound Forecast to Gain Further

USDCAD – The ratio of long to short positions in the USDCAD stands at 1.47 as nearly 60% of traders are long. Yesterday, the ratio was at 1.75 as 64% of open positions were long. In detail, long positions are 2.4% lower than yesterday and 21.1% weaker since last week. Short positions are 15.6% higher than yesterday and 27.9% stronger since last week. Open interest is 4.2% stronger than yesterday and 2.9% below its monthly average. The substantive jump in USDCAD short positions has greatly moderated our bearish bias, and indeed one of our SSI-based trading strategies will likely go long the USDCAD in the near future.

Swiss Franc Forecast Positive

USDCHF – The ratio of long to short positions in the USDCHF stands at 2.94 as nearly 75% of traders are long. Yesterday, the ratio was at 4.03 as 80% of open positions were long. In detail, long positions are 9.5% lower than yesterday and 1.9% weaker since last week. Short positions are 23.9% higher than yesterday and 10.1% stronger since last week. Open interest is 2.9% weaker than yesterday and 6.7% above its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.

Japanese Yen Likely to Recover versus Dollar

USDJPY – The ratio of long to short positions in the USDJPY stands at 1.99 as nearly 67% of traders are long. Yesterday, the ratio was at 2.26 as 69% of open positions were long. In detail, long positions are 4.3% lower than yesterday and 0.4% weaker since last week. Short positions are 8.4% higher than yesterday and 6.6% weaker since last week. Open interest is 0.4% weaker than yesterday and 8.9% below its monthly average. It is a bit surprising to see that traders remain so aggressively long the USDJPY despite its fairly aggressive rallies. Clearly our contrarian analysis has not worked on this pair since it hit near the 89 mark. We will nonetheless stick with what has worked for a long time and call for USDJPY losses.

GBPUSD – The ratio of long to short positions in the GBPUSD stands at -1.42 as nearly 59% of traders are short. Yesterday, the ratio was at -1.77 as 64% of open positions were short. In detail, long positions are 15.9% higher than yesterday and 0.9% stronger since last week. Short positions are 6.6% lower than yesterday and 1.4% stronger since last week. Open interest is 1.6% stronger than yesterday and 4.4% below its monthly average. The noteworthy overnight moderation in the SSI ratio gives us pause in our otherwise GBPUSD-bullish forecast.

EURUSD – The ratio of long to short positions in the EURUSD stands at -1.49 as nearly 60% of traders are short. Yesterday, the ratio was at -2.25 as 69% of open positions were short. In detail, long positions are 35.0% higher than yesterday and 16.9% stronger since last week. Short positions are 10.5% lower than yesterday and 5.1% weaker since last week. Open interest is 3.5% stronger than yesterday and 2.4% above its monthly average. The noteworthy overnight moderation in the SSI ratio gives us pause in our otherwise EURUSD-bullish forecast.