FX Futures Positioning: USD, EUR, GBP, CAD | COT report

FX futures positioning shows traders leaning decisively against the US dollar, with net-short exposure climbing to its most bearish level since June. Yet beneath the headline figure, positioning across EUR/USD, GBP/USD and USD/CAD suggests sentiment may be nearing extremes in parts of the G10 complex.

Here’s what the latest COT (IMM) data reveal about large speculators and asset managers across the US Dollar Index, euro, pound and Canadian dollar.

Large Speculator Positioning from the COT report

Source: CFTC, CME, LSEG

Futures traders were net-short the US dollar by $20.5 billion – their most bearish level since June. A move above $21.3 billion would take net-short exposure to its highest level since April 2018.

• US Dollar Index: Asset managers increased net-short exposure to a 19-week high, while large speculators were marginally net-short at -729 contracts.
• EUR/USD: Net-long exposure rose to a near three-year high, with gross longs reaching a fresh record high among large speculators.
• GBP/USD: Gross short exposure increased for the first time in 10 weeks among large speculators.
• USD/JPY: Only minor adjustments were made to yen positioning, with large speculators remaining marginally net-short JPY futures while asset managers stayed net-long.
• USD/CAD: Large speculators were net-long for a second consecutive week, with positioning at its most bullish level since September 2022.
• AUD/USD: Large speculators increased net-long exposure while asset managers trimmed net-short exposure. However, gross longs and shorts declined among both groups last week.
• NZD/USD: Asset managers increased gross-long exposure to a 21-week high.

Asset Manager Positioning | COT Report

Source: CFTC, CME, LSEG

FX Futures Positioning | COT Report (IMM Data)

US Dollar Index (DXY) Futures Positioning | COT Report

Traders retained a bearish bias on the US dollar last week, although the degree of pessimism depends on the metric used. Net-short exposure to the USD via FX futures collectively rose to $20.5 billion, with G10 currencies accounting for $17.4 billion of that total.

Asset managers increased net-short exposure to a 12-week high of 3.9k contracts, although positioning remains historically light and the week-on-week change was marginal. Large speculators are barely net-short at just -729 contracts.

Unless US data deteriorate rapidly, it is difficult to justify current levels of net-short exposure, in my view. With a bullish pin bar formed two weeks ago, risks of a USD bounce remain while price holds above the recent swing low – potentially fuelled by short-covering remain while prices hold above the recent swing low – potentially driven by short-covering.

Source: CFTC, IMM, ICE, LSEG

EUR/USD Futures Positioning | COT Report

If the US Dollar Index is set to bounce, EUR/USD may be vulnerable to a pullback. The euro’s rally has effectively stalled around 1.20, yet traders continue to add fresh longs. Large speculators lifted net-long exposure to another record high, while short positions remain relatively subdued.

Net-long exposure now sits around 35k contracts below its all-time high, suggesting positioning is fast approaching a potential sentiment extreme.

Source: CFTC, IMM, LSEG

GBP/USD Futures Positioning | COT Report

Political instability and a more dovish-than-expected BoE saw bearish bets rise against the British pound last week. Large speculators increased their net-short exposure to GBP/USD futures for the first time in 11 weeks, driven by a reduction of 6.5k long contracts and an increase of 5.4k shorts.

Asset managers also increased net-short exposure, although they have remained heavily net-short in recent months – unlike large speculators, who had been on the cusp of flipping to net-long positioning.

COT report chart of GBP/USD futures showing rising net-short positioning among large speculators, with shorts increasing and longs trimmed amid weaker British pound sentiment.

Source: CFTC, IMM, LSEG

USD/CAD Futures Positioning | COT Report

It has taken a surge of new bullish bets and a sharp reduction in shorts to push Canadian dollar futures marginally net-long. While overall net exposure is not yet signalling a sentiment extreme, bullish positioning may be approaching one.

Large speculators lifted net-long exposure to a 4.5-year high, with short contracts falling to their lowest level since November 2022. That is hardly encouraging for bears looking to fade the trend, but it could serve as a warning for CAD bulls and may limit further downside for USD/CAD in the near term.

Source: CFTC, IMM, LSEG

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge