Forex Speculators Boosted US Dollar Bets, Cut JPY, GBP And MXN Positions
Zachary Storella | Jul 29, 2018 02:32AM ET
The latest data for the weekly Commitment of Traders (COT) report, released by the Commodity Futures Trading Commission (CFTC) on Friday, showed that large traders and currency speculators continued to raise their bets in favor of the US dollar this week while cutting back on the Japanese yen, British pound and the Mexican peso.
Non-commercial large futures traders, including hedge funds and large speculators, had an overall US dollar net position totaling $20.33 billion as of Tuesday July 24th, according to the latest data from the CFTC and dollar amount calculations by Reuters. This was a weekly rise of $1.92 billion from the $18.41 billion total position that was registered the previous week, according to the Reuters calculation (totals of the US dollar contracts against the combined contracts of the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc).
The aggregate US dollar position increased for a sixth straight week and surpassed the +$20 billion level for the first time since January 24th of 2017.
For individual currency contracts this week, the non-commercial large futures traders, including hedge funds and large speculators, bet in favor of the US Dollar Index (6,347 weekly change in contracts) the euro (8,233 contracts), Canadian dollar (2,973 contracts) and the New Zealand dollar (697 contracts).
The currencies whose speculative bets declined this week versus the dollar were the British pound sterling (-7,991 contracts), Japanese yen (-15,119 contracts), Swiss franc (-3,665 contracts), Australian dollar (-4,961 contracts) and the Mexican peso (-9,494 contracts).
Table of Weekly Commercial Traders and Speculators Levels and Changes:
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US Dollar Index:
Speculators once again raised bets for the US dollar index this week by 6,347 contracts to a total net position of 25,271 contracts. The US dollar index spec position has now seen improvement for fourteen straight weeks and is above the +20,000 net contract level for the first time since 2017.
EuroFX:
Euro positions rebounded this week after two down weeks. The euro speculator positions had fallen for ten out of the previous eleven weeks before this week’s turnaround. The overall standing is above the +20,000 level for a third week but is down from +109,744 net contracts only ten weeks ago.
British Pound Sterling:
British pound sterling positions dropped this week for the fifth time out of the past six weeks. The GBP is at the most bearish since September 5th of 2017 and has now been in bearish territory for six straight weeks.
Japanese Yen:
Japanese yen positions dropped sharply (above -10,000 contracts) for a second week and fell for a fourth straight week. The overall position level is at the most bearish since March 13th.
Swiss Franc:
Swiss franc positions declined for a second straight week and for the fourth out of the past five weeks. The overall net position continues to be bearish above the -40,000 net contract level for a fourth straight week while the overall spec position has now been bearish for 51 straight weeks dating back to August 2017.
Canadian Dollar:
Canadian dollar positions edged higher for a second straight week after falling for three weeks in a row. The overall net position has now been bearish for eighteen straight weeks and is above the -40,000 bearish level for a fourth week.
Australian Dollar:
Australian dollar bets fell lower this week for the second time out of three weeks. The overall net position continues to be in a bearish position for a seventeenth straight week and above -40,000 net contracts for a third week.
New Zealand Dollar:
New Zealand dollar bets advanced for a second week this week after four straight weeks of declines. The overall net position has now been bearish for six weeks while remaining above the -20,000 net contract level for a fourth week.
Mexican Peso:
Mexican peso bets dropped this week after three weeks of gains. The overall position remains in bullish territory for a fourth consecutive week after MXN positions were under heavy selling pressure prior to the recent presidential election.
*COT Report: The weekly commitment of traders report summarizes the total trader positions for open contracts in the futures trading markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm ).
The Commitment of Traders report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions data that was reported as of the previous Tuesday (3 days behind).
Each currency contract is a quote for that currency directly against the U.S. dollar, a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and a net long position expect that currency to rise versus the dollar.
(The charts overlay the forex closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.) See more information and explanation on the weekly COT report from the CFTC website.
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