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COT Report: Analysis and Talking Points

  • EURUSD Shorts Rise to Highest Level Since December 2016
  • USD Longs Jump to $32.3bln vs G10 Currencies
  • IG Client Positioning Imply Stronger Bearish Contrarian Bias in EURUSD

The Predictive Power of the CoT Report

COT Report

Source: CFTC, DailyFX (Covers up to April 2nd, released April 5th)

EURUSD Shorts at Highest Level Since December 2016

As Euro zone data continues to deteriorate speculators are now the most bearish on the Euro since December 2016, as net-shorts increased by a sizeable $2.5bln to $13.8bln. Consequently, this boosted USD longs to $32.3bln against G10 currencies.

Commodity currencies (CAD, AUD, NZD) saw net-shorts pick up, however, despite the shift in the stance from the RBNZ, speculative positioning in NZD is relatively neutral, which may imply that traders could be somewhat complacent if the RBNZ raise the risk of a near term cut. Reminder, money markets are fully priced in for a 25bps cut by August.

Elsewhere, net positioning in GBP remains slightly bearish, with net shorts marginally rising by $100mln to $815mln. Eyes on this week’s EU summit (Wednesday) where it is likely that a Brexit extension will be announced.

IG CLIENT POSITIONING

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Retail positioning show the largest weekly build in NZDUSD longs, rising 65.9%, which in turn increases the bearish contrarian bias. Alongside this, IG client positioning show that over 70% of traders are net long in EURUSD, consequently keeping risks to the pair on the downside. (For full IG client positioning, click here)

US Dollar

COT Report USD

EURUSD

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GBPUSD

COT Report: GBPUSDPlease add a description for the image.

USDJPY

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USDCHF

COT Report: USDCHFPlease add a description for the image.

USDCAD

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AUDUSD

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NZDUSD

COT Report: NZDUSDPlease add a description for the image.

KEY TRADING RESOURCES:

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX