E Speculators Flock To Safe Havens Amid Geopolitical Tensions; Gold Futures Eye Key Breakout

The ramp up in rhetoric between the Trump administration and North Korea has caused a flight-to-safety as one would expect. This has triggered a safe-haven rally into Gold futures, US 30-year treasuries and the Japanese yen, according to the latest COT (Commitment of Traders) report (as of August 8th). The most significant move in the FX futures positioning was once again with the Yen, as the percentage of long (futures) positions of speculators improved for the 2nd straight week. This enabled the net percentage (of long positions) to edge higher to 23%, highlighting an improvement off the recent 2-year low. The number of gross short positions (vs the yen), fell for the 3rd straight week, allowing for the net (position total) to increase by another 16K. 

According to retail trader data provided by Oanda Corporation, the retail population continues to fade yen strength, pushing the overall percentage of bulls down to 33%. While this is at the year's low in terms of yen (retail) optimism, the previous two times the percentage reached these levels, the yen managed to grind higher the subsequent few weeks. Moreover, the technicals for the USD/JPY continue to highlight a double top formation in the mid-114 region. A solid break below 108.67 would confirm the bearish pattern and could expose 107.85 (key Fibonacci retracement) before targeting the mid-105 area.

The net long tally for euro (futures) speculators ticked up after having dropped the previous 2 weeks. Price-action was constructive for the week as the EUR/USD continues to consolidate recent 18-month highs. The gross long position surged, exceeding the recent record high, allowing for the net percentage (65% long) to bump up.

According to the latest data from Oanda, retail traders whom had been previously  unwilling to commit to the euro's recent rise, looked to have finally participated in the euro's end of week rise. This suggests that both the speculator and retail populations are seemingly optimistic towards the euro, which could some choppiness and potentially delay an extension towards the 1.2000 to 1.2140 region (EUR/USD). If, however, the 1.17 handle and/or 20-day moving average support for the EUR/USD is compromised, then it could signal a broader correction for the dollar.

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