The following data cover the latest from the CFTC’s Commitment of Traders as reported by Oanda from the week of from Monday, February 8, 2016. From Oanada:

“The Commitments of Traders (COT) is a report issued by the Commodity Futures Trading Commission (CFTC). It aggregates the holdings of participants in the U.S. futures markets (primarily based in Chicago and New York), where commodities, metals, and currencies are bought and sold. The COT is released every Friday at 3:30 Eastern Time, and reflects the commitments of traders for the prior Tuesday.”

In this edition of “Forex Critical” I focus on notable changes in the currency positioning of non-commercial traders, also known as speculators. While speculators do not necessarily drive market action, they can provide good proxies for the market sentiment that DOES drive currency moves. Wherever meaningful, my snapshots of currency charts show U.S. dollar currency pairs to provide a common point of reference and a direct comparable to the charts provided by Oanda (the yellow line in the positioning charts). These charts come from FreeStockCharts.com. I provide Oanda’s embeded tool at the end of this post for your convenience.

Summary

In general, what was hot is not hot now. Speculators have reversed positioning across major currencies. In some cases, fundamental and lasting changes could be underway. This is truly a critical juncture for forex markets in terms of market sentiment. The common theme is a general unwind from bullish sentiment toward the U.S. dollar.

The Australian Dollar
Speculators have again retreated on short positions. Net positioning sits almost at zero now. The lack of interest in bearish positions supports my expectation that the Australian dollar (FXA) is likely to bounce in a trading range against the U.S. dollar (DXY0) for the time-being. I continue to prefer to stay away from trading this pair until a definitive move occurs – for example, a breakout above 200-day moving average (DMA) resistance.