June 3 Commitment Of Traders: Are Bulls Up To The Challenge?

CURRENCIES

US Dollar Index: Has been range-bound between 100-plus and 93-ish for over a year now.  In the middle, 96 has proven to be an important price point as well.  This Wednesday, the dollar index rose to 95.91 before retreating.

Then came Friday, and the disappointing jobs report; the dollar index collapsed 1.6 percent.  Prior to this, weekly indicators were approaching/at the median.  This was a good opportunity for dollar bears to try to push the index lower, and they have.

Thus far, they have non-commercials on their side.  The latter, having pushed net longs to two-year lows four weeks ago, continues to act tentative.

A week ago Friday, Ms. Yellen delivered the afore-mentioned comments at Harvard.  Rather revealingly, these rather hawkish-leaning comments were not enough to convince non-commercials to start adding to net longs.

June 3 Commitment Of Traders Report: Currently net long 9.9k, down 1.3k.

Euro: Eurozone consumer prices fell 0.1 percent in May y/y, following a drop of 0.2 percent in April.  This was a fourth straight monthly drop.  The ECB targets inflation of just under two percent.

In the meantime, Eurozone loans to non-financial companies rose 1.2 percent in April, versus 1.1-percent rise in March.  Household lending slowed to 1.5-percent growth, versus 1.6 percent in the prior month.  The M3 money supply grew by 4.6 percent, slower than five percent in March.

Either way you cut it, the effects of the ongoing monetary stimulus are yet to show up in the Eurozone data.

The ECB nonetheless is optimistic for the rest of the year, upgrading this year’s growth and inflation forecasts.  The former goes to 1.6 percent from 1.4-percent forecast in March, and the latter from 0.1 percent to 0.2 percent.

The euro rallied 2.3 percent for the week, not because of ECB optimism but due primarily to Friday’s dismal payroll data in the U.S.  The euro surged 1.9 percent in the session.  The daily oversold conditions it was in helped.

One-plus-year resistance at 114-114.50 probably gets tested again.

June 3 Commitment Of Traders Report: Currently net short 37.7k, down 241.

Thanks for reading.

Twitter:  @hedgopia

Read more from Paban on his blog.

The author may hold positions in mentioned securities at the time of publication.  Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.