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CoT Report: Will NZD/USD Speculators' Flip to Net-long Prove Untimely?

CoT Report: Will NZD/USD Speculators' Flip to Net-long Prove Untimely?

2018-02-05 10:00:00
Paul Robinson, Strategist
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CoT Highlights:

  • Large speculators buy NZD for 5th week in a row, now net-long
  • It comes at a time when kiwi is turning down from resistance, may prove an untimely flip to long
  • Futures positioning charts for other key FX-pairs and markets

The CoT report is longer-term sentiment indicator; for short-term sentiment indications see theIG Client Sentiment page.

The most recent Commitment of Traders (CoT) report did not quite have as significant of changes as we have seen in recent weeks. Many of the contracts we follow remain near extreme levels either historically or looking back over the past year, as we discussed last week when we took a look at the euro and crude oil.

Every Friday, the CFTC releases the weekly report showing traders’ positioning in the futures market as reported for the week ending on Tuesday. In the table below, we’ve outlined key statistics regarding net positioning of large speculators (i.e. hedge funds, CTAs, etc.). This group of traders are largely known to be trend-followers due to the strategies they typically employ, collectively. The direction of their position, magnitude of changes, as well as extremes are taken into consideration when analyzing how their activity could impact future price fluctuations.

Key stats: Net position, one-week change, and where the current position stands relative to the past 52 weeks.

CFTC CoT positioning data table

Large speculators buy NZD for 5th week in a row, now net-long

This past week’s report showed large speculators flipping net-long for the first time since the final week of October. This comes after large trend-followers held the largest short position since 2015 just as recent as late December.

NZD/USD during the buying spree rose over 10%, an impressive run, but there is reason to believe a reversal in that trend is underway. There is a resistance zone in the low-7400s dating back to 2016 along with a trend-line from 2014. This combination put a pause in upward momentum, and Friday’s big down day cemented a bearish weekly reversal bar.

While large speculators have a solid track record of correctly identifying intermediate to long-term trends, short covering seen the past few weeks and a flip to net-long may prove to be untimely. Looking lower, the 200-day arrives around 7146, but no real price support for a good ways lower when looking at the weekly chart.

Chart 1 – NZD Positioning

NZD cftc cot large speculator positioning

Chart 2 – NZD/USD: Weekly

NZD/USD weekly price chart

To see how sentiment could tie into our outlook on FX pairs and markets, check out the DailyFX Q1 Forecasts.

Large speculator profiles for major FX & markets:

US Dollar Index (DXY)

CoT Report: Will NZD/USD Speculators' Flip to Net-long Prove Untimely?

Euro

CoT Report: Will NZD/USD Speculators' Flip to Net-long Prove Untimely?

British Pound

CoT Report: Will NZD/USD Speculators' Flip to Net-long Prove Untimely?

Japanese Yen

CoT Report: Will NZD/USD Speculators' Flip to Net-long Prove Untimely?

Swiss Franc

CoT Report: Will NZD/USD Speculators' Flip to Net-long Prove Untimely?

Canadian Dollar

CoT Report: Will NZD/USD Speculators' Flip to Net-long Prove Untimely?

Australian Dollar

CoT Report: Will NZD/USD Speculators' Flip to Net-long Prove Untimely?

Gold

CoT Report: Will NZD/USD Speculators' Flip to Net-long Prove Untimely?

Silver

CoT Report: Will NZD/USD Speculators' Flip to Net-long Prove Untimely?

Copper

CoT Report: Will NZD/USD Speculators' Flip to Net-long Prove Untimely?

Crude Oil

CoT Report: Will NZD/USD Speculators' Flip to Net-long Prove Untimely?

S&P 500 (E-mini)

CoT Report: Will NZD/USD Speculators' Flip to Net-long Prove Untimely?

Trader Resources

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help improve performance, and a guide specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

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