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Positions of large speculators according to the COT report as at 13/8/2021

Total net speculator positions in the USD index rose by 400 contracts last week. This change is the result of a 2,500 contract increase in long positions and a 2,100 contract increase in short positions.

The increase in total net speculator positions occurred last week in the British pound and the Swiss franc.

The decrease in total net positions occurred in the euro, the Australian dollar, the New Zealand dollar, the Canadian dollar, and the Japanese yen.

The Reserve Bank of New Zealand will decide on interest rates on Wednesday this week. Analysts expect a rate hike from 0.25% to 0.50%. If the rate hike is accompanied by an optimistic outlook on the economy and the bank indicates further rate hikes, then the NZD is likely to appreciate. However, if the rate hike is accompanied by concerns about the further spread of the Delta variant of the coronavirus that has put Australia in lockdown, the NZD could weaken even if rates are raised.

The positions of speculators in individual currencies

The total net positions of large speculators are shown in Table 1: If the value is positive then the large speculators are net long. If the value is negative, the large speculators are net short.

 

 

13/8/2021

6/8/2021

30/7/2021

23/7/2021

16/7/2021

9/7/2021

USD index

19,300

18,900

16,500

12,200

11,300

7,600

EUR

33,900

38,000

38,100

45,800

59,700

77,200

GBP

7,100

-100

-5,700

-3,500

8,000

21,900

AUD

-49,300

-41,300

-39,300

-35,700

-28,800

-24,900

NZD

-1,000

-300

1,400

3,000

3,200

1,800

CAD

6,500

7,500

5,400

12,900

26,400

41,200

CHF

9,700

7,500

8,500

8,000

7,100

10,200

JPY

-60,700

-55,200

-59,900

-55,700

-56,300

-69,100

Table 1: Total net positions of large speculators

 

Notes:

Large speculators are traders who trade large volumes of futures contracts, which, if the set limits are met, must be reported to the Commodity Futures Trading Commission. Typically, this includes traders such as funds or large banks. These traders mostly focus on trading long-term trends and their goal is to make money on speculation with the instrument.

The total net positions of large speculators are the difference between the number of long contracts and the number of short contracts of large speculators. Positive value shows that large speculators are net long. Negative value shows that large speculators are net short. The data is published every Friday and is delayed because it shows the status on Tuesday of the week.

The total net positions of large speculators show the sentiment this group has in the market. A positive value of the total net positions of speculators indicates bullish sentiment, a negative value of total net positions indicates bearish sentiment.

When interpreting charts and values, it is important to follow the overall trend of total net positions. The turning points are also very important, i.e. the moments when the total net positions go from a positive value to a negative one and vice versa. Important are also extreme values of total net positions as they often serve as signals of a trend reversal.

Sentiment according to the reported positions of large players in futures markets is not immediately reflected in the movement of currency pairs. Therefore, information on sentiment is more likely to be used by traders who take longer trades and are willing to hold their positions for several weeks or even months.

Detailed analysis of selected currencies

Explanations:
 

Purple line and histogram in the chart window: this is information on the total net position of large speculators. This information shows the strength and sentiment of an ongoing trend.

Green line in the indicator window: these are the bullish positions of large speculators.

Red line in the indicator window: indicates the bearish positions of large speculators.

If there is a green line above the red line in the indicator window, then it means that the overall net positions are positive, i.e. that bullish sentiment prevails. If, on the other hand, the green line is below the red line, then bearish sentiment prevails and the overall net positions of the big speculators are negative.

Information on the positions of so-called hedgers is not shown in the chart, due to the fact that their main goal is not speculation, but hedging. Therefore, this group usually takes the opposite positions than the large speculators. For this reason, the positions of hedgers are inversely correlated with the movement of the price of the underlying asset. However, this inverse correlation shows the ongoing trend less clearly than the position of large speculators.

Charts are made with the use of www.tradingview.com.
 

Euro

Date

Weekly change in open interest

Weekly change in total net positions of speculators

Weekly change in total long positions of speculators

Weekly change in total short positions of speculators

Sentiment

13/8/2021 27,600 -4,100 13,800 17,900 Weakening bullish
6/8/2021 -3,500 -100 -3,200 -3,100 Weakening bullish
30/7/2021 -5,100 -7,700 -6,400 1,300 Weakening bullish
 
COT-16-7-obr-1-1.png
Figure 1: The euro and COT positions of large speculators on a weekly chart


Total net speculator positions fell by 4,100 contracts last week. This change is due to an increase in long positions by 13,800 contracts and a decrease in short positions by 17,900 contracts.

The price of the euro strengthened slightly last week, especially in the Friday session. There was no fundamental reason for this move, so it was more of a temporary correction of the current bearish trend.

Long-term resistance: 1.2240 - 1.2350

Long-term support: 1.1700 - 1.1750
 

The British pound

Date

Weekly change in open interest

Weekly change in total net positions of speculators

Weekly change in total long positions of speculators

Weekly change in total short positions of speculators

Sentiment

13/8/2021 2,000 7,200 1,600 -5,600 Bullish
6/8/2021 -4,500 4,600 1,900 -3,700 Bearish
30/7/2021 -3,400 -2,200 -3,000 -800 Bearish

 

COT-16-7-obr-2-1.png
Figure 2: The GBP and COT positions of large speculators on a weekly chart


In the past week, total net speculator positions increased by 7,200 contracts and they are back in a bullish range as total net speculator positions are positive at 7,100 contracts. The change in total net positions over the past week is the result of a 1,600 contract increase in long positions and a 5,600 contract decrease in short positions.

The pound opened and closed at about the same price against the US dollar last week.

 

Long-term resistance: 1.42-1.4350

 

Long-term support: 1.3670-1.3700
 

The Australian dollar

Date

Weekly change in open interest

Weekly change in total net positions of speculators

Weekly change in total long positions of speculators

Weekly change in total short positions of speculators

Sentiment

13/8/2021 1,900 -8,000 -400 7,600 Bearish
6/8/2021 2,000 -2,000 300 2,300 Bearish
30/7/2021 4,300 -3,600 400 4,000 Bearish
 
COT-16-7-obr-3-1.png
Figure 3: The AUD and COT positions of large speculators on a weekly chart


The increase in bearish sentiment in the Australian dollar continued last week with speculators' overall net positions falling by 8,000 contracts. This change is due to a decrease in long positions of 400 contracts and an increase in short positions of 7,600 contracts.

The Australian dollar is falling because of new restrictive measures to prevent the spread of the Delta variant of the coronavirus and the lockdown of this country. Weak economic data from China supports the AUD’s weakness.

Long-term resistance: 0.7550-0.7600

 

Next long-term support:0.7000-0.7050  

The New Zealand dollar

 

Date

Weekly change in open interest

Weekly change in total net positions of speculators

Weekly change in total long positions of speculators

Weekly change in total short positions of speculators

Sentiment

13/8/2021 3,900 -700 300 1000 Bearish
6/8/2021 -1,200 -1,700 -2,500 -800 Bearish
30/7/2021 400 -1,600 -1,200 400 Weakening bullish

COT-16-7-obr-4-1.png
Figure 4: The NZD and the position of large speculators on a weekly chart


Last week, total net positions fell by 700 contracts, which is the result of a 300-contract increase in long positions and a 1,000-contract increase in short positions.

The Central Bank of New Zealand will decide on interest rates on Wednesday morning. The central bank is expected to raise the rate from 0.25% to 0.50%. This is already priced in the NZD.

If the central bank indicates that further rate hikes will continue given the good local economy, then the NZD could appreciate. If the central bank accompanies the rate hike with cautious commentary accentuating concerns about the spread of the Delta version of the coronavirus, then the NZD could weaken even if there is a rate hike. If rates are not raised, the NZD will weaken very dramatically.

Resistance: 0.7370-0.7450

Long term support: 0.6760-0.6800

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