Weekly COT report: Traders flip to net-short exposure on the euro

As of Tuesday the 3^rd of May:

According to IMM, traders were net-long the US dollar by $18.3 billion, up +5.9 billion from the previous week.
Large speculators flipped to net-short exposure on euro and New Zealand dollar futures.
Net-short exposure to the British pound futures were at their most bearish level since September 2019.
Traders were net-short copper futures for a second week and at their most bearish level since May 2020.
Net-long exposure to gold fell for a fourth consecutive week and is now at its least bullish level in 3-months.

Read our guide on how to interpret the weekly COT report

GBP futures:

The BOE (Bank of England) hiked rates by 25-bps last week, yet the pound continued to tumble as they revealed their concerns of weaker growth over the next 18-month alongside high inflation. Yet as the meeting was after this report was compiled then it the current chart may underestimate how bearish traders are on the currency. As things stood on Tuesday, traders were their most bearish on GBP futures since September 2019. And whilst one could argue that positioning may be getting stretched the fundamentals suggest there could be further downside for the pound.

Euro futures:

When you consider that the euro has been in a strong downtrend since it peaked in January 2021, traders have spent a surprising amount of that time with net-long exposure. Last week they reverted to net-short exposure for the first time since early January and only by -6378 contracts. One observation that may explain this characteristic is that it appears to be a well hedged currency, with around 200k contracts long and 200k short over the past couple of months. So for us to expect net-short exposure to increase by any meaningful amount, we need to see large speculators reduce their hedging by closing out those gross longs. Perhaps if the US 10-year yield can break convincingly above the 2018 high could be the trigger.

Copper futures:

The extended (and strict) lockdowns across China are weighing heavily on commodities. Traders were net-short copper futures for a second consecutive week and at their most bearish level in two years. However, prices remain elevated. And as there are no immediate sighs of China stepping away from their ‘zero-covid’ policy, it leaves the potential for further selling pressure on key commodities such as copper. Also take note that gross shorts are rising whilst gross longs are falling which is the winning combination for a strong trend to materialise.

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.

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.