Weekly COT report: GBP futures on the cusp of net-long exposure
Matt Simpson January 23, 2022 8:14 PM
What began as a short-covering rally is now seeing increased bullish activity on the British pound futures contract.
- Traders reduced net-long exposure to the US by -$6.9 billion last week, according to IMM
- Euro futures were net-long for a second consecutive week
- Traders were net-short GBP futures by just 247 contracts, its least bearish level in 11 weeks.
- Large speculators flipped to net-long exposure on CAD and MXN futures
Traders appear on the cusp of flipping to net-long exposure on British pound futures. At just 247 contracts net-short, it is the least bearish traders have been since November. And with new longs and shorts being initiated over the past 4-weeks (with longs as an increasing pace) then it is no longer exclusively a short-covering rally. With that said, GBP fell to an 8-day low on Friday so they amy still be net-short at the time of writing.
Guide to Pound sterling
Traders flipped to net-long exposure on the Canadian dollar for the first time in 8-weeks last Tuesday. 5.5k long contracts were added and bears added -9.4k, which is a healthy sign for the bullish case. To put this into perspective, the +14.9k addition to net-long exposure is a _2 standard deviation move. However, traders drove prices below 0.80 on Friday and the weekly chart printed a small bearish hammer, so it is touch and go as to whether bulls can retain their lead this week.
Read our guide on the A guide to CAD
Large speculators flipped to net-long exposure on the Mexican peso last week for the first time since May 2021. Over the past 4-week bulls have added 45.4k contracts yet, at the same time, bears also added 35.7k contracts. This is not exactly what we want to see for a strong bullish cases as investors are mostly hedging their bets. The Peso has also risen for 7-consecutive weeks so we cannot help but wonder if that streak is about to be broken and bulls reconsider their exposure.
As of Tuesday 18th January 2022:
- Large speculators trimmed net-long exposure to its least bullish level since late October
- Net-long exposure to copper futures rose to a 10-week high
traders increased net-long exposure by another 25.3k contracts, with 18.8k longs added and 6.5k short contracts removed
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