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COT Report: Analysis and Talking Points

  • US Dollar Longs Surge
  • GBPUSD net shorts highest since April 2017
  • EUR Most Shorted Currency in G10 Complex

The Predictive Power of the CoT Report

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Source: CFTC, DailyFX (Covers up to July 30th, released August 2nd)

US Dollar Longs Surge, EUR and GBP Shorts Increase - COT Update

The latest CFTC positioning shows that the USD saw sizeable inflows with net longs boosted by $3.38bln to $19.5bln vs. G10 currencies. The bulk of the increase was led by Euro shorts, which saw net short positioning rise by $2bln to $7.5bln, marking the largest short among speculators across the G10 complex.

GBP shorts were yet again extended with bearish positioning at -$6.8bln, which is now the most bearish that speculators have been since April 2017. Elsewhere, modest profit taking has seen CAD net longs scaling back to $1.65bln. While investors cut back on JPY net shorts amid the rising concerns of the economic backdrop.

IG CLIENT SENTIMENT (RETAIL POSITIONING): AUDUSD

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Data shows 80.4% of traders are net-long with the ratio of traders long to short at 4.09 to 1. In fact, traders have remained net-long since Jul 19 when AUDUSD traded near 0.70098; The number of traders net-long is 4.1% lower than yesterday and 14.0% higher from last week, while the number of traders net-short is 15.9% lower than yesterday and 31.9% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUDUSD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger AUDUSD-bearish contrarian trading bias.

US DOLLAR

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EURUSD

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GBPUSD

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USDJPY

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USDCHF

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USDCAD

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AUDUSD

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NZDUSD

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KEY TRADING RESOURCES:

--- Written by Justin McQueen, Market Analyst

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

Follow Justin on Twitter @JMcQueenFX