CFTC Commitments of Traders Forex Positioning Update

In our School of Pipsology lesson on Market Sentiment, we discussed how the Commitments of Traders report from the CFTC can be used as a gauge of long-term positioning. When I pulled up the latest one, I noticed that there were some notable shifts in sentiment.

Commitment of Traders Summary (as of May 13, 2014)

Commitment of Traders Summary (as of May 13, 2014)

In particular, the report for last week shows that traders are still net short on the Japanese yen, euro, and Canadian dollar. Non-commercial traders are still net long on the British pound, Swiss franc, Australian dollar, and New Zealand dollar.

However, the difference between the other week’s net positions and that of the previous week shows that there’s a considerable decrease in EUR net shorts. This suggests that traders rushed to exit their long euro positions after Draghi’s speech and the Bundesbank announcement a few days back.

Anything else you can infer from the latest COT report? Don’t hesitate to share your thoughts in our comment box below! If you’re having trouble understanding these figures, make sure you review our lesson on the COT Trading Strategy.

 

  • ForExchange

    Hi Espipionage,

    it is great to read about your report, I have started a thread on the topic exactly yesterday because no one writes about sentiment analysis although it is a powerful tool in my opinion to take into consideration. It would be great if you wrote sometimes your opinion in the thread so you can help us develop our skills ( http://forums.babypips.com/fundamental-ville/66162-trading-based-market-sentiment.html ).

    I have a couple of questions to your analysis. Ho did you get the previous week net positions? I mean it look clear to me, making the same formula as for this week. However you get round number and I compared your results to the numbers I got from previous weeks’ report and they weren’t the same. Everything else is clear.

    The summary of the EUR is great, it either shows people took really profits or are just more optimistic on the EUR. Do you think another EUR sell off is in the cards?

    There are two factors which I am not 100% sure how to use in the COT Report. First, the volume. Which volume shows you a change in market sentiment? How do you use volume in your trades? The other problem is the open interest. I am also not sure how it is possible to use that one and take an advantage of it.

    Thanks a lot for the article and I am waiting for your answer!

    • Forex Ninja

      Thanks for checking out my blog! I’ll definitely try to hang out in the forums more so I can post my thoughts on market sentiment as well.

      Since the previous week’s non-commerical long and short positions are no longer available on the CFTC site, I checked the database on the Bloomberg Terminal which has the historical net positions rounded off. Then I cross-referenced this with a couple of online references, one of which is forexlive.com.

      Some of the factors I included in my analysis are explained right here: http://www.babypips.com/school/undergraduate/freshman-year/market-sentiment/commitment-of-traders-report.html

      Open interest simply refers to the number of contracts not yet delivered or executed for the week, and I guess this could serve as a gauge of volume. Although this gives you a sense of how much markets are interested in that particular currency, it wouldn’t really give you a clue on which direction they’re biased. I usually focus on the changes between net short and net long to see if sentiment is changing or wait for extreme positioning to predict a market reversal. Hope this helps!

    • Kobe Welch

      CFTC data is included in InvestUp’s currency sentiment indicators. You can use those. http://investup.com/market-analysis/sentiment-indicators

  • ForExchange

    Thanks Forex Ninja!

    Just in case, once you need the numbers for your report, just write me an email. I save the report weekly, exactly for the reason if I would like to look it back on a later date!

    • Forex Ninja

      Awesome! I’ll definitely send you a message when I need to review past COT numbers. Thanks bro!

  • Pingback: Asian Session Recap - May 27, 2014()