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Positions of large speculators according to the COT report as at 23/7/2021

Total net speculator positions in the USD index rose by 900 contracts last week. This change is the result of a 1,300 contract increase in long positions and a 400 contract increase in short positions.

The increase in total net speculator positions occurred last week in the Swiss franc and the Japanese yen.

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

Equity indices erased early week losses in the second half of last week and the SP 500 made a new all-time high. So from this perspective, we have risk-on sentiment back, which should be particularly supportive for commodity currencies.

However, the Fed will meet on Wednesday where signals regarding future interest rate hikes will be watched very closely. If a faster than expected rate hike is signalled, this could be negative news for the indices and along with this the AUD, the NZD and the EUR could 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.

 

 

23/7/2021

16/7/2021

9/7/2021

2/7/2021

25/6/2021

21/6/2021

USD index

12,200

11,300

7,600

-400

-500

-2,300

EUR

45,800

59,700

77,200

87,200

89,100

118,200

GBP

-3,500

8,000

21,900

17,700

17,900

32,200

AUD

-35,700

-28,800

-24,900

-17,800

-17,600

-17,900

NZD

3,000

3,200

1,800

3,100

3,300

3,300

CAD

12,900

26,400

41,200

45,800

43,200

44,300

CHF

8,000

7,100

10,200

11,100

13,600

9,400

JPY

-55,700

-56,300

-69,100

-69,900

-53,900

-46,900

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

23/7/2021 -5,900 -13,900 -4,200 9,700 Weakening bullish
16/7/2021 -10,400 -17,500 -200 17,300 Weakening bullish
9/7/2021 2,000 -10,000 3,900 13,900 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 13,900 contracts last week. This change is due to a decrease in long positions by 4,200 contracts and an increase in short positions by 9,700 contracts.

The price of the euro weakened last week and is approaching significant support at the 1.1700 level. Last week's ECB meeting was rather dovish in tone as the ECB indicated that, unlike the central banks of the US, Canada or New Zealand, it is not yet considering tapering bond purchases due to concerns about the spread of the Delta coronavirus variant.

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

23/7/2021 16,400 -11,500 -500 11,000 Bearish
16/7/2021 -6,400 -13,900 -12,500 1,400 Weakening bullish
9/7/2021 9,600 4,200 5,600 1,400 Bullish

 

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, the total net positions of speculators fell by 11,500 contracts and entered a bearish negative range. This change is the result of a decrease in long positions by 500 and an increase in short positions by 11,000 contracts.

The pound weakened against the US dollar last week and broke through the support level. However, it closed above this level and the weekly pin bar candle suggests a rejection of lower prices. Therefore, we have kept the broken support level for now.

 

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

23/7/2021 7,600 -6,900 400 7,300 Bearish
16/7/2021 8,600 -3,900 3,400 7,300 Bearish
9/7/2021 6,900 -7,100 4,500 11,600 Bearish
 
COT-16-7-obr-3-1.png
Figure 3: The AUD and COT positions of large speculators on a weekly chart


Last week, speculators' total net positions fell by 6,900 contracts. This change is due to an increase in long positions of 400 contracts and an increase in short positions of 7,300 contracts.

The Australian dollar weakened last week and reached support at 0.7400. This support was then broken on Monday morning. In the event that this breakout is valid, meaning that it is not a false break, the Australian dollar could weaken further.

Long-term resistance: 0.7550-0.7600

 

Long-term support: 0.7400-0.7450 (currently broken)

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

23/7/2021 1,100 -200 0 -200 Weakening bullish
16/7/2021 700 1,400 1,200 -200 Bullish
9/7/2021 400 -1,300 -500 800 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 200 contracts, which is the result of a 200 contract increase in short positions.

The NZD is trading near a support level that has been tested several times and broken last week.

Resistance: 0.7370-0.7450

Long term support: 0.6760-0.6800

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