COT/USD

Traders flipped to net-short exposure to euro futures for the first time since early January last week.

Whilst large speculators trimmed both long and short exposure last week, we continue to suspect gold remains in a corrective move.

Last week, AUD shorts were culled at their fastest pace since March 2020, when eye watering levels of stimulus was rolled out at their height of the pandemic.

Traders continued to pile into long bets on gold and silver last week, whilst offshore ruble speculators seemingly ran for cover.

Gold is clearly back in fashion thanks to the combination of forthcoming Fed hikes and the Ukraine crisis, with futures markets within easy reach of a record high.

Gold remained the go-to hedge before Russia invaded Ukraine on February 24th, and there seems little reason for that trend to change in light of recent headlines.

Bullish exposure continues to fall for the US dollar despite the Fed on the cusp of beginning their rate-hike cycle.

It was the fourth consecutive week that traders reduced their net-long exposure to the US dollar, according to data from IMM (International Monetary Market).

Given the lacklustre bounce on gold alongside a rise in short bets and closure of longs last week, we retain the view that its recent bounce is corrective.

As the data was compiled ahead of the FOMC meeting its likely there are some distortions in this week’s speculative positioning report.

What began as a short-covering rally is now seeing increased bullish activity on the British pound futures contract.