{"id":39153,"date":"2017-04-29T02:38:02","date_gmt":"2017-04-29T09:38:02","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=39153"},"modified":"2017-04-29T02:56:09","modified_gmt":"2017-04-29T09:56:09","slug":"speculators-in-mexican-peso-last-did-this-at-oil-2014-peak","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2017\/04\/29\/speculators-in-mexican-peso-last-did-this-at-oil-2014-peak\/","title":{"rendered":"Speculators In the Mexican Peso Last Did This At Oil&#8217;s 2014 Peak"},"content":{"rendered":"<p>On April 17, 2017, speculators turned bullish on the Mexican peso for the first time in 2 years. That point 2 years ago was a brief 1-week relief from on-going bearishness against the peso. The latest data on net non-commercial positions (speculators) show that the nascent bullishness in the peso carried over into a second week. Speculators have not stayed bullish on the peso for two weeks in a row since September, 2014, a little over 2 1\/2 years ago when oil prices hit a major peak just ahead of a major collapse.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_39154\" aria-describedby=\"caption-attachment-39154\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170429_cot-USD_MXN.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170429_cot-USD_MXN.png\" alt=\"Speculators turned definitively bearish on the peso starting in late 2014 just as oil prices were peaking and prepping for a crash.\" width=\"550\" height=\"550\" class=\"size-full wp-image-39154\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170429_cot-USD_MXN.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170429_cot-USD_MXN-150x150.png 150w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170429_cot-USD_MXN-300x300.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-39154\" class=\"wp-caption-text\">Speculators turned definitively bearish on the peso starting in late 2014 just as oil prices were peaking and prepping for a crash.<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"https:\/\/www.oanda.com\/forex-trading\/analysis\/commitments-of-traders\" target=\"_blank\">Oanda&#8217;s CFTC&#8217;s Commitments of Traders<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>This switch to peso bullishness comes on the heels of the peso&#8217;s complete recovery from its post-election losses. The chart above shows how speculators gradually and then VERY quickly closed out their net short positions against the peso as it became increasingly clear that post-election momentum had topped out for USD\/MXN. <\/p>\n<p><center><br \/>\n<figure id=\"attachment_39156\" aria-describedby=\"caption-attachment-39156\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_USDMXN.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_USDMXN.png\" alt=\"The Mexican peso printed an impressive post-election recovery in 2017 against the U.S. dollar (USD\/MXN).\" width=\"550\" height=\"399\" class=\"size-full wp-image-39156\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_USDMXN.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_USDMXN-300x218.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-39156\" class=\"wp-caption-text\">The Mexican peso printed an impressive post-election recovery in 2017 against the U.S. dollar (USD\/MXN).<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.freestockcharts.com\/platform\/v1\" target=\"_blank\">FreeStockCharts.com<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>With <a href=\"https:\/\/www.bloomberg.com\/politics\/articles\/2017-04-26\/trump-aides-in-raging-debate-over-how-quickly-to-move-on-nafta\" target=\"_blank\">President Trump softening his stance on the North American Free Trade Agreement (NAFTA)<\/a>, the Mexican economy, and thus the peso, can heave a sigh of relief. I assume that the peso&#8217;s rally in 2017 was a general anticipation of President Trump approaching NAFTA differently than candidate Trump.  While these are the early days of the President&#8217;s shift to renegotiation from the campaign rhetoric of complete pull-out, I think the market will continue to maintain a slight bullish bias on the peso going forward (meaning fading rallies in USD\/MXN will likely be the better risk\/reward rather than buying dips).<\/p>\n<p>Still, the current relief for the peso sits within a larger context of an extended losing streak since oil topped out in 2014 ahead of a subsequent collapse.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_39157\" aria-describedby=\"caption-attachment-39157\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_USDMXN-monthly.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_USDMXN-monthly.png\" alt=\"USD\/MXN has gained 28% since the end of 2014 as the peso weakened mightily in the face of collapsing oil prices.\" width=\"550\" height=\"399\" class=\"size-full wp-image-39157\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_USDMXN-monthly.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_USDMXN-monthly-300x218.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-39157\" class=\"wp-caption-text\">USD\/MXN has gained 28% since the end of 2014 as the peso weakened mightily in the face of collapsing oil prices.<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.freestockcharts.com\/platform\/v1\" target=\"_blank\">FreeStockCharts.com<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>Even after oil bottomed in 2016, the Mexican peso failed to benefit. <\/p>\n<p><center><br \/>\n<figure id=\"attachment_39159\" aria-describedby=\"caption-attachment-39159\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_OilPrices.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_OilPrices.png\" alt=\"Oil prices look like they have finally bottomed, but they also looked stalled out now.\" width=\"550\" height=\"450\" class=\"size-full wp-image-39159\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_OilPrices.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_OilPrices-300x245.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-39159\" class=\"wp-caption-text\">Oil prices look like they have finally bottomed, but they also looked stalled out now.<\/figcaption><\/figure><br \/>\n<strong>Source: U.S. Energy Information Administration, Crude Oil Prices: West Texas Intermediate (WTI) &#8211; Cushing, Oklahoma [DCOILWTICO], <a href=\"https:\/\/fred.stlouisfed.org\/series\/DCOILWTICO\" target=\"_blank\">retrieved from FRED, Federal Reserve Bank of St. Louis<\/a>; April 29, 2017.<\/strong><br \/>\n<br \/>\n<figure id=\"attachment_39161\" aria-describedby=\"caption-attachment-39161\" style=\"width: 540px\" class=\"wp-caption alignnone\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_USO.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_USO.png\" alt=\"The U.S. Oil Fund ETF (USO) lost its post-election gains in mid-March. Overall, USO has gone nowhere in over a year.\" width=\"550\" height=\"399\" class=\"size-full wp-image-39161\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_USO.png 550w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2017\/04\/170428_USO-300x218.png 300w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/a><figcaption id=\"caption-attachment-39161\" class=\"wp-caption-text\">The U.S. Oil Fund ETF (USO) lost its post-election gains in mid-March. Overall, USO has gone nowhere in over a year.<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.freestockcharts.com\/platform\/v1\" target=\"_blank\">FreeStockCharts.com<\/a><\/strong><br \/>\n<\/center><\/p>\n<p>So the jury is out as to whether the peso will require definitive positive economic and\/or political catalysts to continue its path of recovery. Based on the past record of peso speculators, I will look to their positioning for key clues.<\/p>\n<p>Be careful out there!<\/p>\n<p>Full disclosure: short USO put options<\/p>\n","protected":false},"excerpt":{"rendered":"<p>On April 17, 2017, speculators turned bullish on the Mexican peso for the first time in 2 years. That point 2 years ago was a brief 1-week relief from on-going bearishness against the peso. The latest data on net non-commercial positions (speculators) show that the nascent bullishness in the peso carried over into a second &#8230; <a title=\"Speculators In the Mexican Peso Last Did This At Oil&#8217;s 2014 Peak\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2017\/04\/29\/speculators-in-mexican-peso-last-did-this-at-oil-2014-peak\/\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[20,1853,377,1803],"tags":[1688,1843,1800,1854,1842,1851,536,1841,538],"class_list":["post-39153","post","type-post","status-publish","format-standard","hentry","category-forex","category-mexico","category-oil","category-trump-trades","tag-cftc","tag-cot","tag-donald-trump","tag-eww","tag-mexican-peso","tag-nafta","tag-oil-2","tag-usdmxn","tag-uso"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Speculators In the Mexican Peso Last Did This At Oil&#039;s 2014 Peak - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2017\/04\/29\/speculators-in-mexican-peso-last-did-this-at-oil-2014-peak\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Speculators In the Mexican Peso Last Did This At Oil&#039;s 2014 Peak - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"On April 17, 2017, speculators turned bullish on the Mexican peso for the first time in 2 years. 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That point 2 years ago was a brief 1-week relief from on-going bearishness against the peso. The latest data on net non-commercial positions (speculators) show that the nascent bullishness in the peso carried over into a second ... 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