Weekly COT report: GBP futures on the cusp of net-long exposure
Matt Simpson January 24, 2022 1:14 AM
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
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.