It can be a challenge staying on top of what’s happening in the FX market; which currencies are strong, which are weak, and positioning. If you don’t watch the space closely, it can be helpful to have a go-to source for the big picture on foreign currencies. That’s where our Friday edition of The Closer comes in.  Click here to learn more about the Closer and how to access it daily.

In addition to recapping price action in equities and interest rates, thematic trades in US markets, and recent economic surprise data for major economies, we also recap developments in the FX markets in our Friday Closer report. One way to do that is to compare the performance of each major developed market currency versus the others. In the first chart below, we do that. When a currency is strengthening broadly, the indices are rising. When they’re weakening, they fall. As shown, EUR has been strong broadly over the past year while the USD has been weak. CAD and SEK have seen a decline in broad strength in recent months while JPY and NOK have picked up.  (All of the charts and tables in this post appear in our Friday Closer each week.)

To gain access to these charts each week in our Friday Closer, start a Bespoke Institutional trial now.

Another way to show strength versus other currencies is to use heatmaps. Each Friday, our recap shows the relative strength of each G10 cross versus all the others, heatmapped to show changes in relative momentum. When a currency is broadly swinging from underperformance (red) to outperformance (green), new uptrends may be starting for its crosses.

We also show how extended trends are by comparing them to moving averages, across all combinations of G10 currencies. In the tables below, we can see EUR, JPY, and GBP are broadly elevated versus their 50-DMAs, and that those 50-DMAs are elevated relative to the 200-DMA. Conversely, SEK and CAD are very weak relative to their trends. This can provide an opportunity to fade or hop on to existing trends in the market.

Finally, we use the Commitment of Traders report to show how speculators in the US FX futures market are positioned. Each chart shows the speculators’ position relative to total open interest; negative readings indicate short positioning, positive represent longs. These series can provide contrarian signals for positioning in foreign exchange markets. As shown in the charts, as of last week large short positioning in JPY were in the process of being closed, while the opposite (large longs being moved back towards neutral) was true in CAD.

To gain access to these charts each week in our Friday Closer, start a Bespoke Institutional trial now.

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