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
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
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
EURUSD
NZDUSD
KEY TRADING RESOURCES:
- Just getting started? See our beginners’ guide for FX traders
- Having trouble with your strategy? Here’s the #1 mistake that traders make
- See our FX forecasts to learn what will drive FX the through the quarter.
--- Written by Justin McQueen, Market Analyst
To contact Justin, email him at Justin.mcqueen@ig.com
Follow Justin on Twitter @JMcQueenFX
