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    Back to the futures: JPY bulls back away

    Net longs for JPY futures are now at their their lowest level since March 2016 and JPY trades sheepishly at the highs whilst BoJ up their verbal games. 

    View related analysis
    THE WEEK AHEADAsia likely to be a key driver

    And roundup of last weeks' events
    RBA: Cut rates to historic low of 1.75%
    AUDUSD: RBA pull the floor from under AUD with lower inflation outlook
    GOLD: Gold vulnerable to a shakeout in week/s ahead
    AUDUSD: Doves continue to shake bulls out of their Aussie longs
    CHINA: China Services PMI moves in lockstep with global reads
    ISM: Manufacturing ticks higher to 50.8
    EURO: PMI's follow the trend - softer yet stronger

    USD Futures continue to experience a slow and steady decline among large specs yet still manage to stay slightly net long. This may change next week as price action has made a positive development but still too soon to be confident the swing low has been seen. With Open interest rising and at its highest since Feb '16 it adds extra credence to the reliability of the bullish hammer on W1 so I will continue to monitor signs of bullish follow through across USD crosses. 

    EUR Futures remain within a bullish channel but potential of a top is on the cards, having printed a shooting star reversal below 1.1720 resistance. Again price action should the guide due to the significant price action happening post-CFTC report. However there are plenty of support levels close by which may make the downside limited (at first at least) but the main point here is to be cautious of the bullish side. 

    CAD Futures produced a bearish key reversal (also a bearish engulfing) on W1 in light of the wild fires which saw sharp reversal for CAD crosses. It is also another example where the CFTC poisoning doesn't capture the price movements seen in the latter part of the weak, as both long and short exposure was recorded as sticking with the trend bears became more bearish and bulls more bullish) yet price action clearly does not back this up. So similar to AUD futures I would expect this to be corrected n next week’s report. 

    AUD futures’ Net long large specs took a dip as expected, however it still does not include the complete storey as the data excludes lower inflation forecast. This saw AUDUSD plummet towards the 73c handle by close of Friday’s traders price in further rate cuts from RBA.  

    JPY Futures remain stubbornly high against the wishes of BoJ. As discussed during Friday's webinar you have to make the choice of whether you want to trade with or against the Central Bank in the wake of an intervention. Large longs have back away from the table and at their lowest level since March 2016 with shorts also lowering slightly (pulling open interest down with it). 

    On a technical level you have to note the sheepishness of last week's range in comparison the elongated marabuzo candle, highlighting the caution from JPY bulls as the Central Bank ups their verbal threats to weaken their currency. Trade JPY crosses with caution.  

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