CoT: Massive Speculative Changes in the Euro, GBP, AUD, and JPY

CoT Highlights:

• Euro saw a record change as speculators further unwind net-long
• GBP, AUD, and JPY (surprisingly) all saw big changes, too
• Large speculator profiles for other major markets

For a timelier indicator of sentiment in major currencies and markets, see the IG Client Sentiment page.

Friday’s report brought with it numerous outsized changes in several of the largest FX contracts, none bigger than the record change in the euro. Most of these changes, while big, aren’t a total surprise given the slide we’ve seen in the Euro, pound, Australian dollar, and other currencies versus the dollar. The Japanese yen shedding over 40k contracts among large speculators was a little surprising, though, given that it’s been a relatively choppy market recently.

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

Euro saw a record change as speculators further unwind net-long

In the euro there was a one-week change of -52.1k contracts, the largest reduction (or addition) to a position on record. This brought the net-long total to only +36k contracts, the smallest held by large speculators since May 2017. This comes after seeing a record long position topping +151k in April.

The unwind doesn’t come as a major surprise given not only the size of recent positioning, but also how far the euro fell in such a short period of time. This report also included the drastic price decline seen the week before on ECB-day. It’s hard to say that the selling is overdone, but the excessive bullishness has at the least been neutralized.

Chart 1 – Euro Positioning

GBP, AUD, and JPY (surprisingly) all saw big changes, too

Selling in EUR wasn’t isolated, but rather a theme. GBP saw a -30k swing in net positioning which flipped the balance from net-long nearly 11k contracts to short 19k. Large speculators added to their net-short in AUD by a count of 27.8k contracts, bringing the total to -43k – the shortest since 2015. The JPY positioning profile also saw a big change (-40.6k), but was a bit more surprising given how choppy the currency has been recently in what has been a quiet market.

GBP Positioning

AUD Positioning

JPY positioning

As the second half of the year closes in, see how sentiment could tie in with the Top Trading Opportunities in 2018

Large speculator positioning profiles:

US Dollar Index (DXY)

Canadian Dollar

Swiss Franc

New Zealand Dollar

Gold

Silver

Copper

Crude Oil

S&P 500 (E-mini)

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

You can follow Paul on Twitter at @PaulRobinsonFX