The most significant move in futures positioning (week ending September 19th) was once again with the British pound, as sentiment improved the most (week over week) on record. The Federal Reserve provided the markets with the hawkish news it was looking for, as global yields continue to recover off 2017 lows and as the yield curve flattens even more. The latest Commitment of Traders (COT) report also highlighted continued yen short-covering despite a new trade-weighted low for Japan's currency. Lastly, US equity (bullish) sentiment pulled back as speculators cautiousness and indecision signal a potential bearish reversal pattern heading into the last week of September.

British pound speculative sentiment soared after the BOE (Bank of England) stunned market participants the prior week by signalling a rate hike at the next MPC meeting. According to most recent COT (Commitment of Traders Report), large speculators substantially increased their long exposure, adding the most net longs in a week in recent history. This is occurring while retail FX optimism towards Sterling remains near the lowest level for the year and both times (in May & June) retail sentiment reached this extreme the pound had actually begun to top-out. Moreover, last week's price-action demonstrated GBP's overbought status and could hint of extended consolidation until over-stretched technical conditions unwind a bit. That said, a move towards 1.3831/1.3948 to the topside is still favored while corrective dips in the GBP/USD remain supported in the mid-1.34's.

The 10-month improvement in speculative euro positioning has pulled back quite significantly off the largest net long position by (non-commercial) speculators on record seen two weeks ago. The EUR/USD, however, managed to appreciate during that period (Sep 12th - Sep 19th),albeit rather marginally. This may be due to the large short-covering move by commercial traders (hedgers) that more than offset the dip in non-commercial net longs. Also, retail FX trading positioning indicates that the retail population began selling euros again just last week, which could provide further support for the single currency going forward.While the 1.1840 region remains supportive, the next key (upside) objective is 1.2138 or the mid point of the overall range since 2014. 

The percentage of long contracts by non-commercial speculator's improved for the 8th straight week, highlighting the short-covering of the yen carry trade from mid-July's 2-year peak. The decline of the yen since September 8th, however, has seemingly caught traders off-guard, as the trade-weighted yen has quickly fallen to a new 2017 low. According to recent retail FX trading data, the retail population has continued to fight recent yen weakness and has nearly upped their holdings to a neutral net position.If retail traders continue to buy yen, then a sustained push through the 113.00 level (USD/JPY) could expose the key 114.38 region. That said, a sustained loss of the 100-day moving average at 111.00 could quickly re-open the 109.33/110.00 region to the downside.

Bullish sentiment by Australian dollar (large) speculators increased substantially, reaching a new record net long position. Recent moves (up) through the July high at .8066 (AUD/USD), however, continue to be brief, as price-action spent most of last week consolidating under the 80 cent threshold once again. Although, the latest trend (up) looks to be losing steam, subsequent dips seem to find its footing at a relatively high level. If retail FX traders continue to sell the AUD as they did in the tail-end of last week, Aussie bulls may be able clear .8066 (to the upside)and potentially negate bearish divergences seen on both daily and weekly charts. This would also increase the odds for a sustainable move through the recent high at .8125 towards .8455. That said, a clean loss of .7835 (to the downside) would suggest a much more meaningful correction in (bullish) sentiment which could trigger a move (down) to the key .7700 region.

Canadian dollar bullish sentiment by large speculators inched up in the latest COT report after having steadied over the past few weeks off August's peak. Meanwhile, after reaching a fresh 2-year low two weeks ago, the USD/CAD has managed to recover a bit. The most recent retail FX data indicates that the retail trading population is starting to buy into the Loonie, which is typically bearish if this trend persists.Also, with weekly RSI diverging, further Canadian currency strength could be rather limited until the rather crowded net long position by futures speculators can unwind a bit more. That said, the recovery in the USD/CAD has been choppy and looks to be a mere technical correction within the latest downtrend, especially while price-action remains substantially below the psychological 1.25 threshold.

Gold futures sentiment has continued to wane, according the latest COT report, as net long positions by percentage ticked down for the 2nd straight week. More importantly, Gold futures since breaking a key trendline in August, have managed to erase all of September's gains and nearly half of the latest up-move from July, all in one fell swoop. According to recent retail FX trading data, the retail population continues to anticipate a return to strength for the yellow metal. While, this development alone could temporarily guide gold futures lower, overbought conditions on both daily & weekly charts have been somewhat alleviated. That said, downward momentum seems to be strong enough to push gold futures potentially towards 1280, the exact midpoint of the latest range (since July). If, however, gold prices can reclaim 1315 to the topside, this would further stabilize bearish short-term momentum.

Crude oil futures continued to hover near the psychological 50 mark, despite recently breaking out of a 7-month trendline resistance. Positioning by futures traders (Sep 12 to Sep 19) increased in terms of net long positions and percentage. While, the technical outlook has remained confined to a well-established range between 42 & 52, a sustained push beyond 50.46 (July 31st high) would shift expectations (higher) towards 52 then possibly 54. That said, the rather tepid up-move could hint of and losing 49.15 to the downside could usher-in further ranging and expose the 46 handle again.

E-mini S&P 500 futures reached another all-time high last week, but finished the week mostly unchanged. The problem, however, is that indecisive price-action at such an extreme is often followed by nasty downside reversals. Moreover, the latest speculative sentiment data highlighted that E-mini S&P 500 speculators were growing even more cautious. The net long percentage pulled back even further from last month's fresh multi-year highs and is clearly diverging with respect to price-action. It will be interesting from a longer-term perspective, how price-action reacts next week given last week's bearish technical pattern (weekly evening star doji). That said, the overall trend up remains clearly in tact and would need a clean (downside) breach of 100-day moving average support to signal a trend change.

Nasdaq 100 futures speculators also pared back net longs in the latest COT report. This allowed for the net long percentage to inch down from 64% to 62% heading into the close of last Tuesday's trade.Subsequent price-action suggests that technical headwinds such as weekly (chart) divergences could potentially limit further strength. Moreover, the lethargic mood exhibited by non-commercial traders, suggest that Nasdaq 100 futures could struggle to make headway without some sort of bullish news event that can trigger separation from the August highs. The FOMC last week failed to be that catalyst for equity traders, which could shift attention back to the Trump administration's proposed economic policies. That said, it would still take a sustained loss (by Nasdaq 100 futures) of the 5800 region to shift the overall trend lower.

US 10-Year futures sentiment continues to diverge from price-action. While this sudden (down) move in bond prices has seemingly caught the market off-guard, the most recent COT data also continued to point out that (large) speculators continue to not fully participate, but have been adding to both gross & net longs for the 2nd straight week. Even in the face of last week's FOMC meeting and rising rate expectations, sentiment has remained up-beat. The only caveat is that the Fed's decision to begin balance-sheet normalization sort of exhausted the latest decline and since then there is a sense (technically) that US 10-year futures prices are stabilizing. This hints of more two-way price-action as we saw last week, especially as the economic calendar dries-up heading into month-end.

US 30-year futures speculators actually were much less pessimistic than usual, according to the latest COT report, as bullish sentiment improved back towards its 2017 high. Gross longs, however, pared back quite a bit, putting some more separation between the highest level since 2008 seen in August. The dramatic reduction in gross shorts, however, is what drove sentiment higher. This is becoming a dominant theme in bond markets, as sentiment continues to diverge with (bearish) price-action. For US 30-year futures, this may be more prevalent since the yield curve is flattening and is at the narrowest its been all year. Technically, bond futures appear to basing post last week's Fed decision, which again could suggest further 2-way moves going into the last week of the month.