News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Bearish
Gold
Mixed
GBP/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Knowing how to accurately value a stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here: https://t.co/QszmdZFxlk https://t.co/Evr5KgUjVo
  • $GBPUSD corrects from stretched valuations, however, positioning clear is likely to entice dip-buyers. Get your market update from @JMcQueenFX here: https://t.co/sfFdBx9pN6 https://t.co/j6nnry65SW
  • Did you know a Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out https://t.co/c51s3IBcEu https://t.co/oQrOpYINOj
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/LSVPlus0vv
  • There’s a strong correlation between interest rates and forex trading. Forex is ruled by many variables, but the interest rate of the currency is the fundamental factor that prevails above them all. Learn how interest rates impact currency markets here: https://t.co/J0EPMD2Cfi https://t.co/rPd6B5KzuI
  • Time-cycle analysis suggests that the Japanese Yen could slide significantly lower against its major counterparts. Key levels for AUD/JPY, EUR/JPY and GBP/JPY. Get your market update from @DanielGMoss here:https://t.co/WPq4Z9zzEw https://t.co/VzVLrBbL9q
  • The Australian Dollar looks poised to outperform the haven-associated US Dollar and Japanese Yen. However, it may lose ground to the New Zealand Dollar. Key levels for AUD/USD, AUD/JPY and AUD/NZD. Get your market update from @DanielGMoss here:https://t.co/cuxRxl5WaF https://t.co/pujrmqSxV7
  • Has anyone explained the risk of inflation on the markets in terms of tendies?
  • The US Dollar is trying to break higher versus ASEAN currencies. The Singapore Dollar, Philippine Peso, Thai Baht and Indonesian Rupiah are under pressure. Will follow-through last? Get your market update from @ddubrovskyFX here:https://t.co/JOWG9q01q0 https://t.co/j2ICxgrLa3
  • The commodity-sensitive Canadian Dollar may continue outperforming its major counterparts in the coming weeks. USD/CAD, CAD/CHF, CAD/JPY and EUR/CAD key levels to watch. Get your $USDCAD market update from @DanielGMoss here:https://t.co/9bkVXQuP5C https://t.co/cLNEG36mZ8
Weekly CoT Update for Gold, GBP/USD, and Other Major Markets

Weekly CoT Update for Gold, GBP/USD, and Other Major Markets

Paul Robinson, Strategist

CoT Highlights:

  • Large specs remain about as pessimistic as any time in nearly two decades
  • GBP speculative shorts shrinking as price declines (unusual behavior)
  • Large speculator profiles for other major currencies/markets

See the IG Client Sentiment page for a timelier look at sentiment in major currencies and markets.

On Friday, there weren’t any wild one week changes to speak of, but there is one curious trend which has emerged in the British Pound as large speculators continue to cover into price weakness. Gold traders haven’t made any significant moves in the past few weeks, but with their positioning representing the most pessimistic since the early 2000s, one has to wonder if they have capitulated or could we see selling continue along with a decline in the price of gold as was the case in the mid to late-90s?

On Fridays 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.), excluding small speculators and commercial traders.

‘Large specs’ are known to typically employ trend-following strategies, and as such, they tend to add to long positions and reduce shorts in uptrends while reducing long positions and increasing shorts 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.

CFTC CoT data table

See what fundamental and technical drivers are at work in the Q4 Trading Forecasts.

Large specs remain about as pessimistic as any time in nearly two decades

Large speculators are currently net-long just under 2k contracts of gold, which of course at first glance isn’t an extreme. They were even a little short as recently as October and have been generally flat since August. Not an extreme, but it does represent about as bearish of a position as this group of traders has held since prior to the 2001-2011 bull market.

After having held a net-long from the 2011 peak (and often-times a very large position), has the giving up on bullish exposure meant we’ve seen a capitulation or could we see a net-short grow in the months ahead as price declines further?

The answer to this question might lie in the price action. While large speculators have essentially given up on a rally, we haven’t seen the type of price behavior which suggests capitulation has taken shape. Back around 1996 large speculators became generally short and it proved to be the correct bet as gold declined by about 40% until a low in 1999.

This may not be how things play out this time around, but so far long-term price action is generally uninspiring and it seems we could see a decline below the 2015 low at 1045 before a sustainable long-term low is forged. If a bearish theme continues to grow legs then look for large speculators to finally get on the right side of the decline over the past several years.

Gold Positioning Chart

gold positioning chart

GBP speculative shorts shrinking as price declines (unusual behavior)

Last week, large specs reduced their net-short for the 7th time out of the past 10 weeks. Large speculators are generally considered trend-followers and so to see short-covering into weakness is counter to their typical behavior, and may turn out to be an important intermediate-term occurrence.

Over the past decade the correlation between the price of GBP and changes in net-positioning in the futures market is +63%, however; the 3-mo correlation is currently -73%, the most extreme negative correlation over at least the past decade.

This could be telling us something is up, and that could be the price of GBP if this turns out to be similar to the last time large specs pivoted from selling to covering into a down-move. Back in late 2016, early 2017 large specs spent some time covering while GBPUSD remained weak.

At that time the 3-month correlation of GBP price to positioning was the 2nd most negative in at least a decade at -65%. While the situation wasn’t perfect, in that we then saw a big addition to shorts just as Cable was coming out of the low, the short-covering into weakness nevertheless proved to be an early sign that a material move higher was coming.

Perhaps this time around short-covering proves to be incorrect and in a shuffle to get on the right side of the decline they rush in to sell helping drive prices down at a rapid rate. In either event, it's the unusual behavior which has my interest piqued, and it looks like GBPUSD is headed for a sizable move soon.

The technical backdrop is weak and suggests more weakness, but if we see some type of sustained pop higher (whether from near current levels or after more selling), then that could quickly change. Keep in mind, this could take several weeks or longer before we have a clearer picture, CoT data is to be used for intermediate to long-term outlooks.

British Pound Positioning Chart

gbpusd cot chart

Other markets:

US Dollar Index (DXY)

Weekly CoT Update for Gold, GBP/USD, and Other Major Markets

Euro

Weekly CoT Update for Gold, GBP/USD, and Other Major Markets

Japanese Yen

Weekly CoT Update for Gold, GBP/USD, and Other Major Markets

Swiss Franc

Weekly CoT Update for Gold, GBP/USD, and Other Major Markets

Canadian Dollar

Weekly CoT Update for Gold, GBP/USD, and Other Major Markets

Australian Dollar

Weekly CoT Update for Gold, GBP/USD, and Other Major Markets

New Zealand Dollar

Weekly CoT Update for Gold, GBP/USD, and Other Major Markets

Silver

Weekly CoT Update for Gold, GBP/USD, and Other Major Markets

Copper

Weekly CoT Update for Gold, GBP/USD, and Other Major Markets

S&P 500 (E-mini)

Weekly CoT Update for Gold, GBP/USD, and Other Major Markets

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

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES