Weekly COT Report: Traders are their most bullish on USD in 2.5 years

Read our guide on how to interpret the weekly COT report

As of Tuesday 30^th November 2021:

Traders added US $2.5 billion to USD net-long exposure, taking it to $24.4 billion – its most bullish level since June 2019
Net-short exposure to British pound futures were at their most bearish in over 2-years
Bears added +16.9k short contracts last week

Dollar bulls go from strength to strength

According to data compiled by IMM (International Money Markets) traders are their most bullish on the US dollar since June 2019. The chart below shows exposure to G10 currencies and emerging market currencies in a ‘stacked’ chart, which when combined represents the total exposure. Its last peak was around +$34 billion and its record sits around $51 billion so do not yet appear to be at a sentiment extreme.

Traders are theist most bearish on GBP futures in 2.5 years

Traders increased their gross-short exposure on GBP futures to 91k contracts, which is the highest levels since October 2019. As gross longs remained effectively flat it has pushed net-short exposure to its most bearish level in 2.5 years. Historically, traders have been much more bearish than this so there are no immediate signs of a reversal, and perhaps we’ll see more extreme net-short exposure if longs begin to close out.

Bears return to the Aussie

Traders reached a record-level of net-bearish exposure in October on AUD futures, which is usually a red flag for a sentiment extreme. Needless to say, many of those bears were forced to cover as AUD prices refused to drop but we have since noted a sudden increase of gross short bets last week – where 16.9k new short contracts were initiated which has dragged net-short exposure to an 8-week low. And with a hawkish Fed and stubbornly dovish RBA we could see further selling pressure on the Australian dollar which closed below 70c on Friday.

As of Tuesday 30^th November 2021:

Bulls and bears continued to trim exposure to gold futures
Net-short exposure to platinum futures rose to a 4-week high
The closure of bullish bets on copper futures dragged net-long exposure to a 3-month low

Bullish bets on copper continued to decrease

Net-long exposure to copper futures fell for a sixth consecutive week and now sits at a 3-month low. The main driver behind this move is due to long contracts being closed, as opposed to fresh shorts being initiated. Whilst this does not make a compelling argument for a bearish case, it does explain why copper prices are struggling to rally and trade in a choppy range around $4.30. Ultimately, we maintain a bullish bias above $4.00 overall but have braced ourselves for some further sideways action over the near-term.

How to trade with FOREX.com

Follow these easy steps to start trading with FOREX.com today:

Open a Forex.com account, or log in if you’re already a customer.
Search for the pair you want to trade in our award-winning platform.
Choose your position and size, and your stop and limit levels.
Place the trade.

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.