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Positions of large speculators according to the COT report as at 15/2/2022

Total net speculator positions in the USD index rose by 1,621 contracts last week. This change is the result of an increase in long positions by 1,979 contracts and an increase in short positions by 358 contracts.

Growth in total net speculator positions occurred last week in the euro, the British pound and the New Zealand dollar.

Decrease in total net positions occurred in the Australian dollar, the Japanese yen, the Canadian dollar, and the Swiss franc.

In the event of a Russian invasion to Ukraine, markets would move into risk-off sentiment. This means that investors would sell risk assets, which include stock indices, and shift their resources into assets that are considered as safe havens in such situations, which include US government bonds and gold. In currency terms, this means that the US dollar, the Japanese yen and the Swiss franc in particular could then appreciate in such a situation. Commodity currencies (especially AUD, NZD) might weaken.

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.

Table 1: Total net positions of large speculators

Date

USD Index

EUR

GBP

AUD

NZD

JPY

CAD

CHF

Feb 15, 2022

35386

47581

2237

-86694

-9333

-66162

12170

-9715

Feb 08, 2022

33765

38842

-8545

-85741

-10366

-59148

14886

-9399

Feb 01, 2022

34571

29716

-23605

-79829

-11698

-60640

18264

-8239

Jan 25, 2022

36861

31560

-7763

-83273

-10773

-68273

12317

-8796

Jan 18, 2022

36434

24584

-247

-88454

-8331

-80879

7492

-10810

Jan 11, 2022

37892

6005

-29166

-91486

-8604

-87525

-7376

-7660


Note: The explanation of COT methodolody is at the end of this report.

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: this is information on the total net position of large speculators. This information shows the strength and sentiment of an ongoing trend. It is the indicator r_COT Large Speculators (by Kramsken) in www.tradingview.com.
  • 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.​
  • We show moving average SMA 100 (blue line) and EMA 50 (orange line) on daily charts.


​Charts are made with the use of www.tradingview.com. The source of numerical data is www.myfxbook.com

Euro

 

date

Open Interest

Specs Long

Specs Short

Specs Net positions

change Open Interest

change Long

change Short

change Net Positions

Sentiment

Feb 15, 2022

702047

217899

170318

47581

1949

-1074

-9813

8739

Bullish

Feb 08, 2022

700098

218973

180131

38842

14667

5410

-3716

9126

Bullish

Feb 01, 2022

685431

213563

183847

29716

2479

155

1999

-1844

Weak bullish

Jan 25, 2022

682952

213408

181848

31560

-8930

1507

-5469

6976

Bullish

Jan 18, 2022

691882

211901

187317

24584

9589

7540

-11039

18579

Bullish

Jan 11, 2022

682293

204361

198356

6005

4075

5288

-2271

7559

Bullish

       

Total change

23829

18826

-30309

49135

 
 

Figure 1: The euro and COT positions of large speculators on a weekly chart and the EURUSD on D1


The total net positions of speculators reached 47,581 contracts last week, up by 8,739 contracts compared to the previous week. This change is due to a decrease in long positions by 1,074 contracts and a decrease in short positions by 9,813 contracts.

Total net speculators positions have increased by 49,135 contracts over the past 6 weeks. This change is due to speculators closing 30,309 short positions and adding 18,826 long positions. This data suggests continued bullish sentiment for the euro.

However, the rising open interest, which increased by 1,949 contracts in the last week, shows the opposite, as the euro fell down last week and this decline is supported by the rising number of open interest contracts. So more bearish traders were in the market. So we have conflicting information here.

The euro weakened slightly last week on fears of an escalation of the conflict between Russia and Ukraine.

Long-term resistance: 1.1461 – 1.15

Support: 1.1280 - 1.1300. Next support is near 1.1220 - 1.1240. A strong support is in 1.1120-1.1140.

The British Pound

 

date

Open Interest

Specs Long

Specs Short

Specs Net positions

change Open Interest

change Long

change Short

change Net Positions

Sentiment

Feb 15, 2022

195302

50151

47914

2237

-2646

5442

-5340

10782

Bullish

Feb 08, 2022

197948

44709

53254

-8545

13941

15112

52

15060

Weak bearish

Feb 01, 2022

184007

29597

53202

-23605

1967

-7069

8773

-15842

Bearish

Jan 25, 2022

182040

36666

44429

-7763

-1194

-3094

4422

-7516

Bearish

Jan 18, 2022

183234

39760

40007

-247

-17259

9254

-19665

28919

Weak bearish

Jan 11, 2022

200493

30506

59672

-29166

486

4526

-5479

10005

Weak bearish

       

Total change

-4705

24171

-17237

41408

 
 

Figure 2: The GBP and COT positions of large speculators on a weekly chart and the GBPUSD on D1


The total net positions of speculators reached 2,237 contracts last week, up by 10,782 contracts compared to the previous week. This change is due to an increase in long positions of 5,442 contracts and a decrease in short positions of 5,340 contracts.

Total net positions have increased by 41,408 contracts over the past 6 weeks. This change is due to speculators exiting 17,237 short positions and adding 24,171 long positions.

This data suggests bullish sentiment for the pound.

Open interest, which fell by 2,646 contracts last week, is indicating that the bullish price action that occurred in the pound last week was not supported by volume and therefore it is weak.

Risk off sentiment in US equities could have a negative effect on the Pound as well as the Euro, which could then send the Pound towards support which is at 1.3380.

Long-term resistance: 1.3620-1.3640. Next resistance is near 1.3680 – 1.3750.

Support: 1.3490 – 1.3520. A next support is near 1.3320 – 1.3380 and then mainly in the zone near 1.3200.

The Australian dollar

 

Date

Open Interest

Specs Long

Specs Short

Specs Net positions

change Open Interest

change Long

change Short

change Net Positions

Sentiment

Feb 15, 2022

192578

11692

98386

-86694

-3825

-5631

-4678

-953

Bearish

Feb 08, 2022

196403

17323

103064

-85741

-510

-1512

4400

-5912

Bearish

Feb 01, 2022

196913

18835

98664

-79829

6893

3714

270

3444

Weak bearish

Jan 25, 2022

190020

15121

98394

-83273

8884

6070

889

5181

Weak bearish

Jan 18, 2022

181136

9051

97505

-88454

-4317

-3332

-6364

3032

Weak bearish

Jan 11, 2022

185453

12383

103869

-91486

5346

-249

1871

-2120

Bearish

       

Total change

12471

-940

-3612

2672

 
 

Figure 3: The AUD and COT positions of large speculators on a weekly chart and the AUDUSD on D1


Total net speculator positions last week reached -86,694 contracts, down 953 contracts from the previous week. This change is due to a decrease in long positions of 5,631 contracts and a decrease in short positions of 4,678 contracts. This data suggests continued bearish sentiment on the Australian dollar, which is confirmed by the downtrend.

Total net positions have increased by 2,672 contracts over the past 6 weeks. This change is due to speculators exit of 3,612 short contracts while exiting 940 long contracts at the same time.

However, last week saw a decrease in open interest of 3,825 contracts. This means that the upward price action that occurred last week was weak in terms of volume because new money did not flow into the market.

The Australian dollar is very sensitive to the international geopolitical situation. If the conflict between Russia and Ukraine escalates, we can expect it to weaken especially on the AUDUSD pair and also the AUDJPY.

Long-term resistance: 0.7200-0.7250 and especially near 0.7270-0.7310.

Long-term support: 0.7085-0.7120. A strong support is near 0.6960 – 0.6990.

The New Zealand dollar

 

Date

Open Interest

Specs Long

Specs Short

Specs Net positions

Change Open Interest

Change Long

Change Short

Change Net Positions

Sentiment

Feb 15, 2022

64105

24923

34256

-9333

9228

7755

6722

1033

Weak bearish

Feb 08, 2022

54877

17168

27534

-10366

-3590

-2037

-3369

1332

Weak bearish

Feb 01, 2022

58467

19205

30903

-11698

5151

3257

4182

-925

Bearish

Jan 25, 2022

53316

15948

26721

-10773

8589

4336

6778

-2442

Bearish

Jan 18, 2022

44727

11612

19943

-8331

2661

652

379

273

Weak bearish

Jan 11, 2022

42066

10960

19564

-8604

1764

1543

1302

241

Weak bearish

       

Celková změna

23803

15506

15994

-488

 
 

Figure 4: The NZD and the position of large speculators on a weekly chart and the NZDUSD on D1


The total net positions of speculators reached a negative value last week - 9,333 contracts, having increased by 1,033 contracts compared to the previous week. This change is due to an increase in long positions by 7,755 contracts and an increase in short positions by 6,722 contracts. This data suggests that the bearish sentiment for the New Zealand Dollar continues, but has started to weaken over the past week.

Total net positions have declined by 488 contracts over the past 6 weeks. This change is due to speculators adding 15,994 short positions and adding 15,506 long positions.

Open interest rose significantly last week, increasing by 9,228 contracts. The rise in the NZDUSD price action that occurred last week is therefore supported by volume and therefore the move was strong.

The reason for the NZD strengthening last week is that the Reserve Bank of New Zealand is likely to raise interest rates to 1% on Feb 23, 2022. However, if the conflict in Ukraine escalates further, the NZDUSD could more likely weaken. The reason for the NZDUSD's decline from a technical analysis perspective could also be that the NZDUSD price has reached horizontal resistance and also the upper downtrend line from the daily chart.

Long-term resistance: 0.6700 – 0.6740 and then 0.6850 – 0.6890.

Long-term support: 0.6590-0.6600 and the next support is at 0.6500 – 0.6530.

Explanation to the COT report

  • The COT report shows the positions of major participants in the futures markets. Futures contracts are derivatives and are essentially agreements between two parties to exchange an underlying asset for a predetermined price on a predetermined date. They are standardised, specifying the quality and quantity of the underlying asset. They are traded on an exchange so that the total volume of these contracts traded is known.

 

  • Open interest: open interest is the sum of all open futures contracts (i.e. the sum of short and long contracts) that exist on a given asset. OI increases when a new futures contract is created by pairing a buyer with a seller. The OI decreases when an existing futures contract expires at a given expiry time or by settlement.
  • Low or no open interest means that there is no interest in the market. High open interest indicates high activity and traders pay attention to this market. A rising open interest indicates that there is demand for the currency. That is, a rising OI indicates a strong current trend. Conversely, a weakening open interest indicates that the current trend is not strong.

Open Interest

Price action

Interpretation

Notes

Rising

Rising

Strong bullish market

New money flow in the particular asset, more bulls entered the market which pushes the price up. The trend is strong.

Rising

Falling

Strong bearish market

Price falls, more bearish traders entered the market which pushes the price down. The trend is strong.

Falling

Rising

Weak bullish market

Price is going up but new money do not flow into the market. Existing futures contracts expire or are closed. The trend is weak.

Falling

Falling

Weak bearish market

Price is going down, but new money do not flow into the market. Existing futures expire or are closed, the trend is weak.

 

  • 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. Traders should try to trade in the direction of these large speculators.
  • 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.
  • The COT data are usually reported every Friday and they show the status on Tuesday of the week.
  • 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.