Matt Simpson, CFTe, MSTA
CityIndex
Read our guide on how to interpret the weekly COT report
As of Tuesday 7th January:
- Net-long exposure to USD fell to $4.3 billion. At -$10.2 billion from the prior week, it’s the least bullish investors have been to the dollar since June 2018.
- Traders were the most bullish on GBP since May 2018.
- Large speculators were on the cusp of flipping net-long on NZD.
- Traders were their least bearish on JPY in nearly 3-months.
USD: With traders shedding -$10.2 billion in net-long exposure, it’s the largest weekly change since June 2018 and the largest negative decline since June 2015. It’s also the least bullish traders have been on the dollar in 19-months, since traders flipped to net-long. (Not) QE is certainly having an impact on the dollar, or at least traders perception of it, so perhaps this theme will persist until the Fed fix the issues in the repo market.
AUD: Net-short exposure has fallen to its lowest level in 2-months, and near similar levels seen in January 2019. And the timing is curious, given the RBA could very well cut rates early February. Still, perhaps this will provide bears with better price to consider short traders, particularly if inflation and / or employment data misses the mark ahead of RBA’s first meeting of the year.
NZD: Traders are on the cusp of flipping to net-long exposure. Moreover, we’ve seen a healthy rise of gross long exposure after shorts were culled between September and December. We continue to expect RBNZ to hold rate through Q1 so core view on NZD remains bullish.
As of Tuesday 7th January:
- Copper traders flipped to net-short exposure after just 3-week net long.
- Bullish exposure to platinum hit yet another record high.
- WTI traders were their most bullish since August 2018.
WTI: Whilst traders increased their bullish exposure to a 17-month high, it should be noted that tensions were high in the Middle East which supported oil prices. Yet with WTI’s failure to close above $64 and roll over, it trades back within range and we’d expect positioning to reflect this in the next report. This means range-trading strategies are preferred whilst prices remain below $64 - $65.
CFD and forex trading are leveraged products and can result in losses that exceed your deposits. They may not be suitable for everyone. Ensure you fully understand the risks. From time to time, City Index Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material. As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed
Recommended Content
Editors’ Picks
Gold trades in a rangebound mood around $3,300
Gold now seems to have embarked on a daily consolidation around the $3,300 mark per troy ounce following an all-time peak near $3,320 during early trade. Continued concerns over the escalating US-China trade tensions and a weakening Greenback, support the demand for the metal prior to Powell's speech.
EUR/USD remains consolidative around 1.1350 on firmer US Retail Sales
EUR/USD maintains its daily gains around the 1.1350 region on the back of the resumption of the bearish tone in the Greenback, which showed no reaction to the stronger-than-expected Retail Sales in March. Later in the day, investors are expected to closely follow Fed Chairman Powell’s comments on the economic outlook.
GBP/USD recedes from tops and revisits the 1.3250 zone
GBP/USD extends its positive streak on Wednesday, now coming under some selling pressure around the 1.3250 after earlier multi-month tops around the 1.3300 mark. The daily uptick comes on the back of the weaker US Dollar and easing inflationary pressure in the UK.
BoC set to leave interest rate unchanged amid rising inflation and US trade war
All the attention is expected to be on the Bank of Canada this Wednesday as market experts widely anticipate the central bank to maintain its interest rate at 2.75%, halting seven consecutive interest rate cuts.
Future-proofing portfolios: A playbook for tariff and recession risks
It does seem like we will be talking tariffs for a while. And if tariffs stay — in some shape or form — even after negotiations, we’ll likely be talking about recession too. Higher input costs, persistent inflation, and tighter monetary policy are already weighing on global growth.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.