CoT Weekly Update: GBP/USD, AUD/USD & Other Major Markets

CoT Highlights:

• Large specs add to British pound short position
• Australian dollar short grows to largest since March 2015
• Large spec profiles for other major currencies and markets

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

There were a couple of stand-out changes in currency futures contracts this past week, with large speculators adding aggressively to a relatively large short position in the British pound and building a near-record position in the Australian dollar. USD bulls also kept at it again this past week in the US Dollar Index (DXY), adding to their net-long for the 21st time out of the last 22 weeks.

Every Friday the CFTC releases a detailed report of traders’ positioning in the futures market as reported for the week ending on Tuesday. Outlined in the table below are key stats concerning the positioning of large speculators (i.e. hedge funds, CTAs, etc.). This group of traders largely employ trend-following strategies, and as such, their net long exposure typically increases in uptrends while net short positioning increases in downtrends. 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.

Large specs add to British pound short position

This past week large speculators added to their net-short GBP position by a count of 18k contracts, bringing the total to -79k, the largest since March of last year. The net-change from the prior week ranks in the top 6% in the past 20 years. This change comes without including Friday’s heavy sell-off, and despite the rise off the August low large trend-followers continue to believe there is more pain to come for the pound. Traders should keep an eye on last week’s key-reversal: price could find its way lower soon if this bearish event can’t be erased quickly.

British Pound Large Spec Positioning Chart

Australian dollar short grows to largest since March 2015

AUD sellers also showed up in earnest, extending the net-short established in April to its largest since March of 2015. The nearly -24k contract change ranked in the top 3% in terms of weekly changes over the past 20 years. The 68k contracts short is nearing the record in March of 2015 of just shy of -77k. Given the long-term extreme and large one-week change, should the Australian dollar continue to climb from its recent low there could be fuel for short-covering to drive price higher.

Australian Dollar Large Spec Positioning Chart

See what fundamental and technical drivers are at work in the Quarterly Trading Reports.

Large speculator profiles for major FX & markets:

US Dollar Index (DXY)

Euro

British Pound

Japanese Yen

Canadian Dollar

Swiss Franc

Australian Dollar

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