Blue line = BRLUSD
The market opened at the highs and closed at the lows. Options expiration and July liquidation are responsible for many of the changes in the OI. Worth noting is that the Sep OI is around 15% higher than the July OI was at its peak and can still grow as July continues to roll into Sep and as new fund selling continues to increase while commercial and other specs go longer.
There is a weakness exposed in the long link as we see some large traders liquidating their longs. RC funds increased their short position this week after covering a bit last week. The projections for the market continue to be uncertain. Activity can be construed as either bullish or bearish. For now the market remains heavy but a better feel may be achieved as July gets closer to zero. Thursday’s July OI was 9,730 lots and Friday’s liquidation may make it close enough to zero. FND is Monday and May be a factor as well.
After FND we will be left with a relatively elevated Sep OI which may equate to higher volatility. We will also have the simple dynamics of increasing fund shorts and all other sectors buying, usually. Brazil’s plans to withhold coffee does not seem to be a significant event, and the drop in temperatures that we anticipate are not yet a factor. The market has been dull as spreads have dominated mostly because of the roll but also because of the buying of spreads against fences sold by market makers to trade, possibly, as explained in the last Market report.
The remainder of the week was mixed with a very strong Thursday and a weak Friday. During the COT period the market was down 4.10c as a result of close to 10k lots of net selling, mostly by funds. A lot of force for comparatively small results.