COT

The commitment of traders (COT) report shows how large speculators are positioned across futures markets on the CME exchange.

When yen bulls increase their long exposure by 40% in a week, it is probably worth noting. Especially when large speculators had pushed net-short exposure to a 6-year high the week prior. Every turning point must start somewhere, and I continue to suspect this turning point already has.

EUR/USD bears continued to trim shorts while large speculators added to longs. Whilst this might not be a bullish bet on the strength of Europe, it may well be a bet against the US dollar. And with the 2-year note holding above key support and shorts being trimmed, it hints at lower yields and a weaker US dollar.

Large speculators increased their gross-long exposure to AUD/USD futures by 17.1% and trimmed shorts by -2.9% on the day of the RBA’s last hike. And this could be a significant development when you consider net-short exposure recently hit a record level of bearishness just six weeks ago, yet prices defied bears with a sustainable break beneath 63c.

It seems a combination of short covering and fresh initiation of longs helped AUD/USD enjoy its best week of the year last week, just a few weeks after large speculators hit a record level of net-short exposure. The same could likely be said for the Dow Jones which also reached a record level of net-short exposure. WTI crude oil failed to capitalise on the risk-on vibe and fell for a second week.

Large speculators were net-short GBP/USD futures for a fourth week and by their most bearish level in six months, with gross shorts rising to a 52-week high. The S&P 500 broke a key trendline last week as asset managers piled into shorting the E-mini index futures. WTI fell in line with last week's bias but may have found support over the neat-term. And investors piled into gold for a second week - ahead of gold's break above $2000.

Whilst traders remain net-long EUR/USD futures, there are early signs of a turnaround in sentiment with asset managers increasing bullish exposure and prices holding above 1.05. Despite higher WTI prices, large futures traders continued to reduce their long exposure while managed funds have increased their shorts.. Perhaps not too surprisingly, asset managers flipped back to net-long exposure to gold and silver futures last Tuesday.

Open interest has fallen notably on USD/JPY since its failed ‘bid’ for spot prices to break and hold above 150. And that further suggests a glass ceiling for prices. Japanese yen futures also saw grow longs increase by 19.6%, although traders remained heavily net-short.

The commitment of traders (COT) report shows how large speculators are positioned across futures markets on the CME exchange.

The commitment of traders (COT) report shows how large speculators are positioned across futures markets on the CME exchange.

WTI crude oil has continued to rally, only we’re now seeing gross longs increase whilst gross shorts are covered, which underscores the strength of the move up to the April highs.

The commitment of traders (COT) report shows how large speculators are positioned across futures markets on the CME exchange.

Whilst net-long exposure to GBP/USD futures has reached yet another 15-year high, it is interesting to note gross-short exposure increased by around 1/3 last week and a two-week bearish reversal pattern formed on prices. And that shows that sentiment towards the mighty pound could be changing.

GBP and JPY futures positioning has been indicating a potential sentiment extreme, although so far we have only seen a sharp reversal on USD/JPY. Will GBP/USD be next?

The commitment of traders (COT) report shows how large speculators are positioned across futures markets on the CME exchange.

The commitment of traders (COT) report shows how large speculators are positioned across futures markets on the CME exchange.

The commitment of traders (COT) report shows how large speculators are positioned across futures markets on the CME exchange.