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.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.