Weekly COT Report

Matt Simpson, CFTe, MSTA CityIndex

A summary of the weekly Commitment of Traders Report (COT) from CFTC to show market positioning among large speculators.

Traders were their most bullish on USD since December 2015, at $34.9bn ($39.6bn net-long against G10 currencies
JPY traders extended their net-short exposure to their most bearish level since December 2018
AUD traders were their most bearish since November 2018
NZD traders increased their bearish exposure at their fastest pace since September 2018

Despite extending their net-short exposure, JPY futures have continued to rise which could catch a lot of traders off-guard. Most notably, Trump’s trade tweet has seen JPY rally today which piles extra pressure on the bear-camp. It’s also worth noting that the extended bearish positioning has been achieved on lower volumes, driven mostly by a reduction of gross longs. This also brings into question the ‘bearishness’ of the net positioning as this is not a move of confidence.

Bears added 10.3k new short bets last week, dragging net-short exposure to its most bearish level this year. We don’t think positioning is yet at a sentiment extreme, and prices have crashed lower today in response to renewed trade tensions. Tomorrow’s RBA meeting could have a large impact on positioning. If they do cut, there’s still plenty of longs to be closed out.

Gold traders shed -28,2k short contracts, yet bulls added just 584k contracts
Sliver traders flipped to net-log after a 1-week hiatus net-short
Copper traders flipped to net-short
Platinum traders extended their net-long exposure to their most bullish level since March 2018

The increased net-long exposure last week was driven mostly by short covering, with -28.2k shorts closed (its largest short reduction since early December). With prices failing to break lower, we’re monitoring gold’s potential for a bullish wedge to develop.

Net-long exposure saw its largest weekly reduction since early February, ahead of further declines seen since last Tuesday. The move was driven by an increase of short bets (+16.9k contracts) and a reduction of longs (-6.4k contracts), which could point towards a deeper correction.

Author

Matt Simpson, CFTe, MSTA

CityIndex

Matt Simpson is a certified technical analyst who combines charts and fundamentals to generate trading themes.

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