The Japanese yen rallied off recent lows amid a risk-off tone that marred global markets at the end of last week. Equities pulled back off recent record levels as traders rotated into under-performing small cap stocks and other safe havens such as gold. Meanwhile, the US dollar struggled on the back of falling yield differentials as a flatter yield curve has caused some concern. Elsewhere, short-term momentum traders continue to buy the USD except vs the Aussie, while speculators maintain extreme bullish stance on Crude oil.

The trade-weighted Japanese yen managed to recover last week, marking a potential turning point for the beaten-up Asian currency.  The yen was able to climb from recent yearly lows amid the risk-off feel that marred global markets towards the end of the week. The USD/JPY, which had been on the move up since September, clearly failed to clear key resistance at 114.33, leading to a test critical support beneath 112.00 on Friday. Potentially fueling this move are developments in two key populations of traders. First, according to the latest COT report, large (non-commercial) speculators increased their short exposure  vs the Japanese currency, marking the largest net short position for the year. This suggests that the yen carry trade is and has been very crowded for some time which could provide ample room for the yen to rally. Secondly,recent retail FX positioning data points out that the retail population have turned from net buyers to net sellers of the yen. These short-term momentum type traders are often caught fighting the move, which also hints of addition gains for the yen.

A sustained loss of support in the 111.72/90 region (USD/JPY) would clearly indicate a shift in momentum to the downside and would re-open critical support at the 111.00 level. That said, Friday's move (USD/JPY) felt a little exhaustive and also highlights oversold conditions (daily chart). The 112.89/96 area, however, will need to be cleared in order for dollar bulls to reclaim momentum.

Speculative euro positioning by non-commercial traders pulled back slightly, according to the latest CFTC positioning data. While this highlights a pullback from the largest net long position by (non-commercial) speculators on record, the large increase in long positions marks only the second time that gross longs have reached the 200K threshold. Meanwhile, the EUR/USD managed to break out of 2-week base in the 1.16 region pattern last week, which has negated a series of minor lower tops and could put the 1.19 handle within reach. According to retail FX trading data, the retail population sold into last week's spike in the euro, extending the recent move in euro pessimism by short-term momentum players. While this is typically viewed as a bullish indicator, if, however, the 1.1820 range midpoint continues to cap on a daily closing basis, then the 1.17 area would quickly come back into play.

British pound speculative (bullish) sentiment rebounded significantly, according to most recent COT report. Large speculators reduced their short positions and upped their long positions, allowing for the overall (net long) position to advance to 48% from 46%. Meanwhile, the retail FX population continued to scale back their net long position off the recent 6-month high, highlighting the continued pessimism that retail traders have for the pound. While, this is typically bullish for the Sterling, recent price-action suggests that weekly technical momentum has stabilized and that a triangle pattern has emerged, highlighting a solid range between 1.30 & 1.33. That said, if  1.31 (GBP/USD) continues to provide support, attention will remain on the upper end of the range at 1.33, then 1.34/1.35 further out to the upside.

Bullish sentiment by Australian dollar (futures) speculators dipped again for the 6th straight week, highlighting the recent downturn in sentiment from the record net long position seen back in September.  According to the latest retail FX positioning data, the retail trading population continues to expect the AUD to turn around vs the USD. While this move in sentiment by short-term momentum traders has been decisively one-sided since mid-July, it has reached an extreme. In both previous times (January & May) at this level of retail optimism, the AUD/USD managed to recover quite dramatically. That said, price-action traced out a lower top last week at .7730 (AUD/USD), which suggests that Aussie could be setting-up for additional weakness possibly towards the .7329/.7371 region, if .7533 were to be cleanly taken-out to the downside. At this point, it would take a sustained move back above .7625, to help the AUD/USD attempt to stabilize near-term bearish momentum and shift focus back towards the key .7730 area again.

Canadian dollar futures (bullish) speculation has reversed lower as of late, but remains extremely high, as positioning yet again persists near the highest level of net longs (by percentage) over the past 5 years. Meanwhile, the USD/CAD pushed slightly higher last week, highlighting a period of possible consolidation for the USD/CAD's ongoing recovery. This suggests that if the USD/CAD can sustain bullish momentum going forward, that large speculators will have continue to capitulate on their extremely bullish (CAD) position which still stands at relatively high mark of 75% (net long) . That said, if the key range midpoint near 1.2917 continues to cap, this suggests that there could be some more consolidation heading into the year-end. If pullbacks remain limited to former resistance near 1.2600, however, then the USD/CAD should remain well-positioned to extends towards the 1.3000 threshold.

Gold futures (bullish) sentiment has continued to wane as of late, but remains at a relatively high level, as the net long percentage of contracts remained at 78%, while the net long total dipped by only 706 contracts. Meanwhile, Gold futures since recovering off 1264 (61.8% of the latest up-move from July) over a month ago, have thrust higher towards the top end of the latest consolidation range. This is partly due to the retail population, which according to recent positioning data, has turned pessimistic towards the yellow metal and has pulled back after sentiment neared the highs of the year as of late. If retail traders continue to sell gold, this could highlight a key higher base (in price action), which would potentially re-open 1309 ahead of 1320. That said, if 1305 continues to cap on a daily closing basis, then expectations for a lower top could emerge.

Crude oil futures sentiment remained near extremes, as positioning by futures traders (into November 14th) dramatically increased their bullish stance in terms of gross and net long positions for the 3rd straight week. Meanwhile, Crude oil prices thrust both lower and higher last week, consolidating the recent move to a 52-week high. Friday's recovery, more importantly, highlights support at the psychological 55 mark, which had previously capped price-action for most of 2017. If price action, however, were to fail to materially clear the recent peak just below 58, then on-going bullish momentum could stall, which could thwart a potential range breakout towards the 2015 highs just above the 60 region.

E-mini S&P 500 futures continue to consolidate near recent all-time highs as sentiment has remained relatively upbeat.  In the latest COT report, however, futures speculators made only minor changes by upping their gross long total by 5K contracts while only adding 1K gross shorts. The overall uptrend in S&P 500 futures, while technically overbought (weekly indicators), should remain in tact while maintaining support ahead of the key 2550/2555 region. That said, if last week move higher ends up failing to clear the recent 2594 peak, then it could set the stage for a well-needed 3-5 %pullback that could help further unwind overbought (weekly) conditions.

Nasdaq 100 futures speculators slightly pared-back their overall bullish stance in the latest COT report, which has now fallen to the lowest level (net long) in 2017.  It was a indecisive week technically, which could be a cause for some concern, especially if price action fails to penetrate through the recent record highs. That said, only a sustained daily close below 6225 (Nasdaq 100 futures) would stall near-term bull momentum and potentially re-open the 6125 region ahead of the psychological 6000 threshold.

US 10-Year futures bullish sentiment was relatively unchanged, as non-commercial traders accumulated both gross long and short positions, but added 24K contracts to the net (long) total. The move in gross short contracts represents nearly the highest level seen since April, but the aggressive bump-up in long positions suggests futures speculators remain somewhat skeptical towards the run-up in yields. While most of the attention has been focused on the front end of the curve, it seems that US 10-year yields have fallen into a comfortable range between 2.30% & 2.40%. That said, while 2.30% holds up, there's a slight bias to the upside for yields on the longer end.

US 30-year futures speculators continued to nudge up their slightly bullish stance, according to the latest COT report. Meanwhile, last week's move in 30-year yields now highlights a potential lower top just ahead of 2.90%. And, although, much of the focus has been on the narrowing of the yield curve, if US 30-year yield were to materially close below 2.77%, not only would it shift US 30-year futures back towards the highs seen back in September and June, but it would most likely further flatten the yield curve, which could usher in risk aversion for the entire global financial market.