Commitment of traders report (COT): Copper investors run to the exit

Commitment of traders – as of Tuesday 28^th June 2022:

• Positioning among FX majors were relatively small last week, with all currencies seeing a change below +/- 10.1k contracts.
• Large speculators trimmed their net-short exposure to GBP, EUR and JPY futures, and increased net-long exposure to CAD and net-short exposure to AUD futures.
• Traders were their least bearish on yen futures since June 2021.

Japanese yen futures (JPY):

Traders have continued to reduce their short exposure to Japanese yen futures, with net-short exposure now at its least bearish level since December 2021. It’s plausible to assume that some investors are becoming nervous of being short the yen after such a strong move, and amidst growing speculation that the BOJ (Bank of Japan) may look to adjust their YCC (yield curve control) target of the 10-year government bond. It is therefore interesting that USD/JPY remains near its 23-year high whilst short exposure to the yen is removed, because it suggests that either USD/JPY may be overvalued, or bears may return if they later feel they were wrong to close out their shorts, which could then send USD/JPY higher.

Commitment of traders – as of Tuesday 28^th June 2022:

• Large speculators were their most bearish on copper futures since March 2020.
• Traders were their least bullish on silver futures since June 2019.
• Large speculators flipped to net-short exposure on platinum futures.

Copper futures (HG):

Copper investors don’t appear to be hanging around to see if we will actually enter a recession. Large speculators are now their most bearish on copper futures since March 2020 and gross shorts have increased for a third week at 78.5k contracts short. If gross short exposure rises above 81.2k contracts, it will be at least a 27-month high. Managed funds have an equally grim view on copper with net-short exposure at its most bearish level since April 2020.

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