Weekly COT Report: Sterling Traders Flip To Net-Long
Matt Simpson January 5, 2020 8:59 PM
A summary of the weekly Commitment of Traders Report (COT) from CFTC to show market positioning among large speculators.
Read our guide on how to interpret the weekly COT report
As of Tuesday 24th December 2019:
- Large speculators reduced net-long exposure to USD by -$3.6 billion and currently stand net-long by $14.5 billion.
- GBP traders flipped to net-long exposure for the first time since April
- NZD traders were their least bearish in nine months
- The divergence between CAD futures pricing and positioning continued to widen
USD: Large speculators cannot seem to find the momentum to be net-long USD by over$20 billion. Net-long exposure has essentially oscillated between $10-$20 billion since July, although looking at price action its possible it could dip beneath $10 over the coming weeks.
GBP: Sterling traders flipped to net-long exposure for the first time in nine months. Although perhaps worth pointing out it lasted net-long for just one week on that occasion. That said, the difference this time around is there’s a clear rise in gross shorts and closure of net shorts over recent weeks, which is much more conducive of a stronger move. Yet on the flip side, a weaker USD has helped, and the UK is about to return to the negotiating table with Eurozone members, meaning GBP will remain a politically driven currency so traders would be wise to remain nimble.
CAD: There’s a clear divergence between market prices and positioning. Whilst futures prices have risen to their highest level since Q4 2018, market positioning is barely net-long. They’ll converge at some point, but we’ll need to see if speculators are about to be caught on the wrong side of the move and fuel a more bullish rally (although higher oil prices from Middle East tensions could perhaps help there). Yet domestically, data remains weaker and it appears harder for BOC to justify rates at 1.75. So, get your popcorn out as we could be building up for a larger move, one way or other for CAD prices.
As of Tuesday 24th December 2019:
- Net-long exposure on WTI is its most bullish since September 2018
- Bullish exposure on platinum hit a fresh record high
- Copper traders were their most bullish in nine months
- Gold positioning was again little changed (but this is clearly out of date given the bullish moves unfold this past week)
WTI: Net-log exposure on WTI is its most bullish since September 2018. And that was before tensions flared in the Middle East. It’s worth noting that gross longs have risen whilst gross shorts have been culled, which is what we require for a healthy breakout. Add into the mix the US attacking pro-Iranian personnel and we have the recipe for a breakout. Interesting, it is rising oil prices which has been lacking from the bearish case for a recession. Time will tell if this will break the camel’s back, but for now, oil prices are firming up and positioning has been building a case for a breakout.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.