Forex Speculators Raise U.S. Dollar Bets, Drop Yen And Euro Positions
Zachary Storella | Jul 22, 2018 01:16AM 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 raised their bullish bets for the US dollar again this week while cutting their positions for the Japanese yen and the euro.
Non-commercial large futures traders, including hedge funds and large speculators, had an overall US dollar net position totaling $18.41 billion as of Tuesday July 17th, according to the latest data from the CFTC and dollar amount calculations by Reuters. This was a weekly rise of $2.0 billion from the $16.41 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 speculative position has risen for five straight weeks and is now at the highest level since March 21st of 2017 when the total was $18.44 billion.
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 (239 weekly change in contracts), British pound sterling (1,651 contracts), Canadian dollar (5,403 contracts), Australian dollar (448 contracts), New Zealand dollar (1,507 contracts) and the Mexican peso (946 contracts).
The currencies whose speculative bets declined this week versus the dollar were the euro (-2,950 weekly change in contracts), Japanese yen (-18,818 contracts) and the Swiss franc (-2,022 contracts).
Table of Weekly Commercial Traders and Speculators Levels & Changes:
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Speculators continued to raise bets for the US dollar index this week by 239 contracts to a total net position of 18,924 contracts. The spec position has now improved for thirteen straight weeks and to a new high bullish level since June 13th 2017 when the net positions totaled 28,025 contracts.
h3 Weekly Charts: Large Trader Weekly Positions vs Price/h3EuroFX:
Euro positions fell slightly this week following a sharp decline last week. The euro speculator sentiment continues to decrease and has fallen for ten out of the past eleven weeks after making a record high above +150,000 contracts in April.
British Pound Sterling:
British pound sterling positions edged slightly higher this week after declining for four weeks in a row (to the most bearish level since September of 2017). The GBP has now been in bearish territory for five straight weeks.
Japanese Yen:
Japanese yen positions dropped sharply this week and fell for a third straight week and for the fourth week out of the past five. The overall position level is at the most bearish since March 13th.
Swiss Franc:
Swiss franc positions declined this week and are down for three out of the past four weeks. The overall net position continues to be bearish above the -40,000 net contract level for a third straight week. The overall spec position has now been bearish for 50 straight weeks now dating back to August 2017.
Canadian Dollar:
Canadian dollar positions edged higher this week after falling for three weeks in a row. The overall net position has now been bearish for seventeen straight weeks and is above the -40,000 bearish level for a third week.
Australian Dollar:
Australian dollar bets edged slightly higher this week and have seen improvement for three out of the past four weeks. The overall net position remains in a bearish position for a sixteen straight week and above -40,000 net contracts for a second week.
New Zealand Dollar:
New Zealand dollar bets rose this week after four straight weeks of declines. The overall net position has now been bearish for five weeks and remains above the -20,000 net contract level for a third week.
Mexican Peso:
Mexican peso bets improved again this week for the third straight week. This week’s slight rise higher follows two strong weeks of gains. The overall position is back in bullish territory for a third consecutive week after MXN positions were heavily sold off 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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