Weekly COT report: Fastest pace of AUD short covering since March 2020

As of Tuesday 15^th March 2022:

The Australian dollar and euro futures contracts saw the largest weekly repositioning, with AUD net-short exposure falling by -33.3k contracts and EUR net-longs falling by -40.1 contracts.
Net-long exposure to the US dollar index fell to its least bullish level in 24-weeks.
Interestingly, net-long exposure to euro futures also fell, to their least bullish level in 9-weeks.
Net-short exposure to CHF futures fell to their least bearish level since September.
Traders remained net-long Russian rubles by 7.5k contracts (down from 19.5k end of February) but open interest is its lowest since December 2020.
Traders were their most bearish on GBP futures in 11-weeks.

Read our guide on how to interpret the weekly COT report The Aussie saw a sharp reduction in net-short exposure last week, which fell -33.4k contracts – its sharpest move since March 2015. 28.6k short contracts were culled, which was its most aggressive rate of short-covering since March 2020 and 4.8k long contracts were added. A strong commodities rally driven by geopolitics and supply concerns, alongside a hawkish Fed and less dovish RBA) is finally seeing those tired shorts run for cover and helped push AUD bac above 74c. Should we see more hawkish rhetoric from RBA then (dare we say) we could even see AUD back above 80c.

NZD futures:

Traders flipped to net-long exposure to NZD futures for the first time in 3-months. And like AUD, we saw a strong reduction of gross shorts (-10.3k contracts) and increase of longs (5.7k contracts). Money markets have fully priced in a further 3 hikes over the next six months with the 6-month OIS rising to 1.75%. And the surge in commodities pricing with global inflation on the rise doing little to dispel expectations of further hikes which remain supportive of NZD.

USD exposure:

Traders were net-long the USD by US $8.7 billion according to IMM (International Money Market, $709 billion of which was against G10 currencies. We saw a sharp drop on exposure to emerging FX, with USD exposure rising by $1.6 billion last week alone, which is its fastest rise since March 2020.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.