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CoT Highlights:

  • GBP net-long among large speculators jumps with rise in currency
  • JPY large specs covered at an aggressive clip on risk aversion
  • Precious metals saw big changes, especially silver

For shorter-term sentiment readings, see the IG Client Sentiment page.

This past week’s report highlighted a few noteworthy changes in positioning among large speculators. Sterling traders continue to be optimistic on the currency, trend favors more upside. There was significant short covering in the Japanese yen as risk aversion continues. Turning to precious metals, positioning in silver turns further net-short, an unusual occurrence.

Each Friday, the CFTC releases their weekly report of traders’ positioning in the futures market as reported for the week ending on Tuesday. In the table below are key statistics for 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. The direction of their position, magnitude of changes, as well as extremes are taken into consideration when analyzing what their activity could mean about future price fluctuations.

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

cftc cot data

GBP net-long among large speculators jumps with rise in currency

Large speculators brought their net-long in sterling up by 15.8k contracts to 23.8k, putting it back at nearly the largest this group of trend-followers has held over the past year. The broader trend in GBP/USD favors further upside in the weeks/months ahead. As long as it stays above 13700 this outlook will remain intact.

See how sentiment could tie into the DailyFX Top Trading Opportunities for 2018

Chart 1 – GBP Positioning

gbp cot large speculator positioning

JPY large specs covered at an aggressive clip on risk aversion

With global stock markets materially weakening since late January, we have seen an increasing bid in in the Japanese yen. In this last week’s report, there was a net change of over 57k contracts, reducing the total net-short held by large specs to only 22k contracts. This puts the position at the smallest short held since December 2016. Look for even further short covering, maybe even a flip to net-long, in the next report as stocks sold off/yen rallied aggressively in the three days following the last reported date (Tuesday).

Chart 2 – Japanese Yen Positioning

JPY cot large speculator positioning

Precious metals saw big changes, especially silver

Gold large specs let go of over 19k contracts, which is a decent-sized reduction, but at over 15k more contracts sold than bought, large silver traders took a small net-long and pushed it to the largest short position (12.5k) since at least 2001. Since 2003, large speculators have been long silver, and only recently did their position turn short. After having held long for such an extended period, is their turn to net-short a sign of more weakness to come or capitulation on what has been a losing proposition since the top in 2011? Right now, we are leaning with the latter scenario.

Chart 3 – Silver Positioning

silver cot large speculator positioning

Large speculator profiles for major FX & markets:

US Dollar Index (DXY)

Weekly CoT Update: Big Changes in GBP, JPY & Silver

Euro

Weekly CoT Update: Big Changes in GBP, JPY & Silver

British Pound

Weekly CoT Update: Big Changes in GBP, JPY & Silver

Japanese Yen

Weekly CoT Update: Big Changes in GBP, JPY & Silver

Swiss Franc

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Canadian Dollar

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Australian Dollar

Weekly CoT Update: Big Changes in GBP, JPY & Silver

New Zealand Dollar

Weekly CoT Update: Big Changes in GBP, JPY & Silver

Gold

Weekly CoT Update: Big Changes in GBP, JPY & Silver

Silver

Weekly CoT Update: Big Changes in GBP, JPY & Silver

Copper

Weekly CoT Update: Big Changes in GBP, JPY & Silver

Crude Oil

Weekly CoT Update: Big Changes in GBP, JPY & Silver

S&P 500 (E-mini)

Weekly CoT Update: Big Changes in GBP, JPY & Silver

Resources for Forex & CFD Traders

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 you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

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