Traders Are the Most Bullish on DXY in a Year

Asian futures:

• Australia’s ASX 200 futures are up 66 points (0.91%) with the cash market currently opening at 7,339.30
• Japan’s Nikkei 225 futures are up 300 points (1.06%) with the cash market currently rising to 28,240.42. opened
• Hong Kong’s Hang Seng futures are up 460 points (1.69%) with the cash market currently opening at 27,804.54 open

UK and Europe:

• The UK FTSE 100 index rose 91.22 points (1.3%) to close at 7,121.88
• Europe’s Euro STOXX 50 index rose by 76.43 points (1.91%) to close at 4,068.09
• The German DAX index rose by 267.29 points (1.73%) and closed at 15,687.93
• France’s CAC 40 index rose 132.69 points (2.07%) to close at 6,529.42

Friday USA close:

• The Dow Jones Industrial rose 4,448.26 points (1.3%) to close at 34,870.16
• The S&P 500 Index rose 48.73 points (1.13%) to close at 4,369.55
• The Nasdaq 100 index rose 103.957 points (0.71%) to close at 14,826.09

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Indices rebounded on Friday

It was only a 4 day week for US stock traders and after a weekday blip, Wall Street rebounded on Friday, bringing the S&P 500 and Nasdaq 100 to marginal gains for the week. The S&P 500 opened just above the crucial 4330 level we covered in Friday’s video and traded to a new record high, despite the Nasdaq closed the week -65 points below its record high. The Russell 2000 broke a four-day losing streak on Friday, closing just above its 50-day eMA, suggesting a major swing low was recorded at 2192 Dow Jones also closed at a record high, albeit below its intraday high of 35,091.

On a final basis the ASX 200 has been limited to an 87 point ranger for the past three weeks. Promising breakout patterns have not been confirmed and breaks have instead reversed, providing range trading strategies with optimal conditions. So if prices can hold above the 7216.6 low, we may see further rebound within their range today.

ASX 200 internal market:

ASX 200: 7273.3 (-0.93%), July 11, 2021

• Energy (0.04%) was the strongest sector and information technology (-2.84%) was the weakest
• 10 out of 11 sectors closed lower
• 36 (18.00%) stocks increased, 153 (76.50%) stocks decreased stock
• 67% of the stocks closed above their 200-day average
• 58.5% of the stocks closed above their 50-day average
• 36.5% of the stocks closed above their 20-day average

Outperformer:

• + 5.08% – Viva Energy Group AG (VEA.AX)
• + 1.98% – NRW Holdings AG (NWH.AX)
• + 1.83% – LendLease Group (LLC.AX)

Underperformer:

• -6.61% – CSR Ltd (CSR.AX)
• -5.71% – Webjet Ltd (WEB.AX)
• -5.47% – Zip Co Ltd (Z1P.AX)

Forex: AUD / CHF looks weak beneath its 200-day eMA

The US dollar index (DXY) returned down 97.80 on our gap target and closed below the 50-week eMA for the fourth straight week. Prices fell to a two-day low during a Risk-on session on Friday, but while holding above 92.00 / 200-day eMA we see the potential for a technical upturn.

The Canadian dollar managed on Friday to offset some of last week’s losses with a strong employment report that saw 230.7 jobs added to the economy and unemployment dropped to 7.8%. However, -33.2 thousand full-time positions were lost, while 263.9 thousand part-time positions were added. Despite the rebound, the Canadian dollar was the weakest major currency last week, with AUD and NZD taking second and third place on the other two commodity forex buddies, AUD and NZD. Meanwhile, currencies as a safe haven JPY and CHF were the strongest majors after a turbulent week.

AUD / JPY rose from its 200-day eMA, a scenario we discussed in Friday’s video. However, the same cannot be said AUD / CHF who only managed a little recovery on Friday. Tuesday’s bearish hammer marked a significant high before momentum quickly pushed prices down and averaged right through the 200-day eMA. Given the established downtrend and the increase in bearish momentum, bears may be tempted to slide into smaller rallies below the resistance levels around 0.6900 (prior support, round number and 200-day eMA). The next major support bears are targeting is the 0.6753 low.

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From the weekly COT (Commitment of Traders) report

From Tuesday, 6th 2021:

• The net long exposure in the US dollar index (DXY) rose to its highest level since June 2020. However, according to calculations by IMM traders, the net short positions in the dollar remain at USD -8.4 billion, though the short exposure was reduced by USD 2.24 billion.
• Conversely, big speculators are now the strongest on the Australian dollar in a year. While long exposure rose 4.5k contracts, short exposure rose 11.6k contracts to its highest level since March 2020.
• The net long exposure in euro futures fell for a third week and thus reached a one-week low.
• Traders have been the least optimistic about New Zealand dollar futures since August 2020.
• Long copper futures exposure increased for the second consecutive month. While long rates barely changed during the week, short rates fell for the third week in a row.

Raw materials:

oil Prices continued to rebound on Friday thanks to a weaker US dollar, falling US inventories and increased demand from China and India. Brent climbed to a two-day high, closing around the April 2019 high of 75.59 and WTI futures rose to 74.56.

platinum Futures have retested their 200-day eMA from below, so now we are waiting to see if momentum goes back down. A break above 1115 will invalidate our short-term bearish bias.

copper Futures rose 1.63% last week and, like platinum, failed to trigger our short bias with a break of the support at 4.20. Given that traders have increased their net long copper futures exposure for a second week (and remain net long), we warm to the notion that copper prices may be even higher after all. A break above 4.4350 resistance would be constructive in the bull case.

Next (times in AEST)

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source https://thedailytradingnews.com/traders-are-the-most-bullish-on-dxy-in-a-year/