CFTC Weekly Positions Report: Turning Positive?

Summary

Latest CFTC positions data, published on Friday, reveals that the market has turned more risk-positive, with safe haven positions turning less bullish. JPY, Gold and US 2-year Treasury note were the biggest losers last week in positioning term, with the leveraged community reducing defensive positions, as the market turned more pro-risk.  

FX

Last week change in positioning saw mixed Dollar positioning, with EUR,GBP and JPY losing ground against the Dollar, while high-yielding currencies (MXN, CAD, NZD and AUD) gaining ground.

GBP net short position moved further, and now the lowest it has been since 2013.

JPY long speculative positions were slightly reduced, and they are now off 8-years high. This moves in tandem with the recent price action in USDJPY.

Commodities Currencies (AUD, NZD, and CAD) continued to move slightly more positive in positioning term.

MXN positioning continues to exhibit a sharp recovery in positioning term. MXN short positions were reduced further (about 1.5$bn USD were sold against the MXN by the leveraged accounts last week).

Commodities

Last week change in positioning saw mixed change in positioning. Gold and Oil long positions were reduced, while Silver positioning turned more positive.

Gold long speculative positions were reduced by about 330,000 contracts, while Silver positions gained about 43,000 contracts. That change is also reflected by the ETF holdings of gold/silver (tracked by Bloomberg, under "ETFGTOTL Index" and "ETSITOTL Index").

Oil positions were reduced by about 19,000 contracts.

Rates

Last week change in positioning was somewhat mixed, with the 2-year note positioning reduced, while 10-year note positioning gaining ground. This should not come as a surprise, as the rate outlook for the US has changed significantly following the recent Non-Farm Payroll. Two main themes are governing the US rates market:

1. Rate hike probability moved significantly higher last week (from less that 20% to about 40% by year-end)

2. The Yield Curve steepened from extremely flat curve.  That should signal a more positive outlook for rates.

Equities

Leveraged positions in US equity market turned positive last week, with both S&P500 and NASDAQ positions gaining about 41,000 contracts on average. VIX speculative positions were reduced by about 215,000 contracts.

S&P500 positions gained about 22,600 contracts, as S&P500 trading near all-time high.

NASDAQ positions gained about 67,700 contracts

VIX positioning was trimmed down as investors turned less fearful of market's downturn. The weekly decline in VIX leveraged positions stood at 21,600 contracts.

FX Scoreboard

Our G10 Scoreboard shows AUD as the biggest winner overall (trading the strongest against its G10 peers), followed by USD and CAD.

The weakest among G10 currencies are the JPY, SEK and CHF.

NOK and SEK continue to diverge further, as SEK continued to weaken last week. AUD and NZD moved in opposite direction last week, as AUD strengthened while NZD weakened (mostly due to increasing odds of August rate cut by the RBNZ, and confusion regarding Jul 21st unscheduled RBNZ press release).

Lastly, as we noted last week, CAD and NOK appeared on the scoreboard as an interesting pair to look at (due to divergence of oil-correlated currencies). Since last Monday CAD strengthened about 1.5% against the NOK.   

Good Luck,

EZTRADER Market Analysis Team