What’s inside:
- Canadian dollar large specs holding largest position since November 2012
- Euro large trend-followers hold steady despite clear turn lower in price
- Australian dollar positioning profile continues to grow to multi-year highs despite price weakness
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Every Friday the CFTC releases the Commitment of Traders (COT) report, which shows traders’ positioning in the futures market as it stands for the week ending on Tuesday. In the table below, we’ve outlined key facts regarding the net positioning of large speculators (i.e. hedge funds, CTAs, etc.). The net size, change in their positioning from the prior week, and where the net position stands relative to the 52-week range.
Noteworthy developments
Canadian dollar – Despite the turn lower in the currency the past three weeks large speculators continue to add to an already large net-long position. At 74.6k contracts it’s the largest position since November 2012. At some point soon, the divergence of lower CAD, continued buying is likely to turn as large specs reduce their long position in the weeks ahead. Large spec selling could accelerate the trend lower as the U.S. dollar finds a bid across the board.
Euro – Large specs continue to hold steady with contracts of the single-currency despite it already having come off 300 pips from the September high. At 88.2k contracts the net-long among the large trend-followers remains near the highest levels seen since 2011. There was a solid technical break in the euro last week, and with it coming after touching off on important long-term levels the euro appears poised for more losses. (Check out this piece from Friday with a big-picture look at EURUSD & other markets.) Should we see meaningful weakness in the weeks ahead, a material reduction in long holdings should be seen.
Australian dollar – The theme of large speculators’ positioning holding steady or increasing despite recent weakness is also seen in the AUD futures market. The large spec net-long has steadily climbed to the largest position since April 2013 despite the price of the currency trading lower than where it was a couple of months ago. Undeterred, but for how long? It would seem a correction in positioning will follow along soon with continued weakness in aussie. We warned a couple of weeks ago that this positioning profile doesn’t bode well for AUD.
The COT report is a longer-term sentiment indicator – for a short-term view on sentiment, check out IG Client Sentiment data.
Other futures contracts and large speculator positioning:
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---Written by Paul Robinson, Market Analyst
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