Weekly COT Report Dollar Bears Throw In The Towell

As of Tuesday 17^th September:

Traders increased net-long exposure to the USD by $2.2 billion, taking bullish exposure to a 3-month high of $15.4 billion
Bullish exposure to the USD index (DXY) was at a 29-month high
Traders were the least bearish on AUD in 6-months
Net-short exposure on NZD hit a record high

DXY: Traders are their most bullish on the USD index since April 2017. However, its sudden jump to new highs has been fuelled by a sharp decline in short positions, with bears closing -9,599 short contacts. We’re yet to see the index break to new highs, but bears fleeing could be the first steps towards such an event.

AUD: Traders are their least bearish on the Aussie in 6 months, having reduced gross-short exposure. That we’ve not see an increase of longs suggests it could be corrective behaviour as opposed to a turnaround, but worth noting none the less as prices remain near multi-year lows as bears lose interest. And this was despite that fact that Tuesday’s RBA minutes saw a higher chance of a 25 bps cut next month.

NZD: Net-short exposure hit a record high, although it was achieved on the closer of longs as opposed to initiation of fresh shorts. Still, with net and gross short exposure at record levels, it’s highly possible we’re at or approaching a sentiment extreme. So bears beware.

As of Tuesday 17^th September:

Minor changes to gold positioning saw bears remain sidelined
Bearish exposure on copper hit a 6-week low
Bullish exposure to palladium hit a 6-week high

Gold: Despite its epic rally, bears remain hesitant to commit and bulls remain defiant. With prices holding above $1500, it’s possible bulls are carving out a corrective low. So we’ll continue to monitor this key level as it could prove to be the springboard for gold’s next advance, or the trigger for a deeper correction..

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. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, 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 StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.