Matt Simpson, CFTe, MSTA
CityIndex
A summary of the weekly Commitment of Traders Report (COT) from CFTC to show market positioning among large speculators.
As of Tuesday the 16th of April:
- Traders were net-long the US dollar by $28.7bn, the highest level since the end of January.
- GBP flipped to net long for the first time since June 2018.
- Improved risk appetite saw less demand for CHF and JPY, with traders now the most net-short since September ’18 and January ‘19, respectively.
- JPY saw the largest net weekly change among FX majors, seeing short interest increase by 15.6k contracts.
Seeing GBP traders flip to net-long for the first time since June 2018 is certainly a milestone, given the negative sentiment surrounding Brexit. Yet that’s its seen on very low volumes (across all trader groups) undermines it somewhat. That said, gross longs moved to their most bullish level this year which could become a positive development, as the route to net-long exposure has mostly been fuelled by short-covering. Over the near-term, GBP’s direction may remain difficult to decipher until we see more evidence of an established trend, powered by volume.
JPY: Net-short exposure moves to its most bearish level since early January, with newly initiated gross shorts outpacing long bets by a factor of 2.3 to 1. With 27.5k gross shorts added, it’s the largest weekly change since October for bears. Interestingly, prices remain supported but we suspect a breakout on USD/JPY could be pending, if risk-appetite continues to allow.
- Gross short positioning on WWTI drops to its lowest level since 2005
- Gold’s net-long exposure fell by -49.1k contracts, its largest fall since December 2017.
- Silver’s bullish positioning as its weakest since this year and close to net-short.
- Aluminium remains net-short for a 2nd consecutive week and is at its most bearish level since Jan 2017. The weekly chart remains elevated around $3 with a bearish pinbar candle.
Net-long exposure on WTI is at its most bullish level since October 2018 (although, adjusted for open interest it has nudged lower over the past week). With gross short positioning at its lowest level since 2005, sentiment for crude remains clearly bullish without it appearing to be at a sentiment extreme.
Gold has remained under pressure, with prices tracking the-long exposure lower. With prices residing around the 200eMA, there is potential for a technical bounce from current levels, but sentiment among large speculators appears to favour further losses further out.
CFD and forex trading are leveraged products and can result in losses that exceed your deposits. They may not be suitable for everyone. Ensure you fully understand the risks. From time to time, City Index Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material. As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed
Recommended Content
Editors’ Picks
EUR/USD retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.