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CoT Highlights:

  • Euro large spec profile at 52-week selling extreme, but still net-long
  • AUD and CHF at true multi-year extremes
  • NZD, CAD, and gold at relative extremes; GBP, JPY are the exceptions

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

Last week, we looked at one of the more interesting reports in some time, with position profiles of the world’s largest speculators making massive one-week changes in several key markets. This last week didn’t bring the same kind of intense shuffling, but does highlight relative (and net) extremes in currencies versus USD.

Five currencies (EUR, NZD, AUD, CAD & CHF) have position profiles in the bottom 4% or lower of the past 52-week range or longer. A lot longer when looking at CHF, which has a net-short rivaling 2007 levels in recent weeks and AUD shorts which is at its largest since 2015.

The others, EUR, NZD, and CAD, are not at net extremes, but still represent relative extremes when compared to their position profiles over the past year. For example, traders have the smallest position in the Euro in over a year, but they are still net-long by a count of 34k contracts. Gold large specs, too, are holding a very small position compared to the past year, but at +77k contracts the position isn’t considered a net extreme.

So, while generally speaking we are only seeing relative extremes, there is plenty of room for these trends to continue, however; the speed at which these extremes developed suggests that recent selling in key currencies (and gold) has been overdone.

Every Friday the CFTC releases an overview of traders’ positioning in the futures market as reported for the week ending on Tuesday. In the table below we’ve outlined key statistics in the category of large speculators (i.e. hedge funds, CTAs, etc.). This group of traders typically employ trend-following strategies. When analyzing the data, we take into consideration the direction of their position, magnitude of changes, as well as extremes.

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

CFTC CoT stat table

As the second half of the year kicks off today, see how sentiment could tie in with our just released DailyFX Q3 Forecasts.

Large speculator positioning profiles:

US Dollar Index (DXY)

CoT Weekly Update - USD Relative Speculative Extremes Persist

Large spec positioning in the U.S. Dollar Index is at 100% of its 52-week range, but doesn’t represent a net extreme at +18k contracts.

Euro

CoT Weekly Update - USD Relative Speculative Extremes Persist

The euro shift recently suggests selling is overdone in the near-term, but traders are still net-long by 34k contracts, so not an ‘actual’ extreme.

British Pound

CoT Weekly Update - USD Relative Speculative Extremes Persist

Cable large spec shorts increased by 2.4k contracts to -21.6k, pushing their net-position to 20% of its 52-week range. Also not at a big extreme in net terms.

Canadian Dollar

CoT Weekly Update - USD Relative Speculative Extremes Persist

Canadian dollar positioning has been volatile, but at -33k contracts it’s not considered yet a net extreme. Nevertheless, it’s in the bottom 2% over the past year.

Japanese Yen

CoT Weekly Update - USD Relative Speculative Extremes Persist

Japanese yen traders are short by 34k contracts, with this position sitting in the upper 75% of the range in the past year. No extremes to report here.

Swiss Franc

CoT Weekly Update - USD Relative Speculative Extremes Persist

Swiss franc positioning among large speculators is not at its most extreme, but is hanging out in 2007 territory with the group of traders collectively holding 38k contracts short.

Australian Dollar

CoT Weekly Update - USD Relative Speculative Extremes Persist

Last week, the net-short in the Australian dollar hit its lowest levels since 2015, and like CHF positioning is at a net and relative extreme. An oversold bounce may be in order.

New Zealand Dollar

CoT Weekly Update - USD Relative Speculative Extremes Persist

Kiwi positioning dropped 1.6k contracts, expending the net-short to -17.5k. This is very near the lowest levels since 2015 and may soon enter a multi-year extreme along with its sibling currency, the Australian dollar.

Gold

CoT Weekly Update - USD Relative Speculative Extremes Persist

The gold profile shows traders holding a net-long which ranks in the bottom 4% over the past year. But while traders have been selling, they still remain net-long 77k contracts.

Silver

CoT Weekly Update - USD Relative Speculative Extremes Persist

Silver positioning recently ramped up, but cooled in the most recent report by 6.7k contracts to a net-long of 34k. Nothing particularly noteworthy in the short-term.

Copper

CoT Weekly Update - USD Relative Speculative Extremes Persist

Copper positioning is volatile and offers little glean from recent changes.

Crude Oil

CoT Weekly Update - USD Relative Speculative Extremes Persist

Little to report on crude oil as positinioning ranks at a neutral 59% over the past year, but it’s worth noting that large specs remain generally very long the commodity.

S&P 500 (E-mini)

CoT Weekly Update - USD Relative Speculative Extremes Persist

Not too much to report here at this time…

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