CFTC COT Forex Positioning: Dollar Bulls All Fired Up!

Is the Greenback about to bring sexy back? The latest Commitments of Traders forex positioning report from the CFTC reveals that dollar bulls piled on their long positions last week, as hedge funds and large non-commercial traders recorded a weekly increase of $4.21 billion in their bullish dollar bets.

CFTC COT Forex Positions

CFTC COT Forex Positioning (June 2, 2015)

If you’re feeling overwhelmed by all these figures, you might need to review our School of Pipsology lesson on How to Gauge Market Sentiment Using the COT Report in order to learn how to pinpoint potential forex market reversals.

Lemme break down the numbers for y’all:

  • Aussie and Loonie traders shifted from a net bullish bias to a bearish one last week.
  • Japanese yen traders stepped up their bearish bias significantly, marking back-to-back weeks of being net short on the currency.
  • Kiwi traders also increased their bearish bets, marking the fifth consecutive week of being net short.
  • Euro traders trimmed their bearish bets slightly, as they have gradually been doing so for five out of the last six weeks.
  • Large non-commercial speculators are overall bullish on the dollar against most currencies, except for the Swiss franc.

Weak data from Australia (quarterly private capital expenditure decline of 4.4%) and Canada (monthly GDP contraction of 0.2%), combined with the relatively cautious BOC statement, explains the shift from a bullish to bearish bias for AUD and CAD. News that Fonterra downgraded their forecasts for dairy volumes and milk payouts also drew more Kiwi bears out to play. As for the Japanese yen, recall that retail sales and household spending figures released that week failed to support the BOJ’s view that a pickup in domestic demand is taking place.

Meanwhile, optimism surrounding the Greek debt talks and rumors that EU and IMF officials worked on a new deal for the debt-ridden nation were partly responsible for reducing bearish bets on the euro. Apart from that, medium-tier reports (German import prices, German retail sales, Spanish and Italian CPI) from the region also showed a few improvements.

Moving forward, the newly released NFP report could entice more forex traders to increase their long dollar positions in anticipation of a Fed rate hike in September.

Got any other conclusions you can draw from this latest COT Report? Feel free to share your thoughts in the comments section or if you’re looking for further discussion, community member ForExchange has a lively thread called Trading based on Market Sentiment in the forums awaiting your participation.

  • ForExchange

    Hi Ninja,

    nice writeup.

    In my opinion I make a little difference with different USD pairs. In the second half of last year when we talked about the USD, we could make all other currencies under one group as USD was the strongest among all. Now for me USD is somewhere in the middle.

    Your table shows perfect that it still beats pretty bad the commodity currencies, but the EUR is stronger and it also only has a draw with GBP and CHF.

    Also I liked that you expressed the better economic performance of European countries. Most people always explain everything only with Greece, Greece and some Greece news. Well it is important, but it is not the whole EU.

    So the conclusion is: the USD might still be sexy, but not as sexy as it was. A little diet might help 🙂

    FE

    • HAHAHA I like how you put the conclusion! Yeah I agree the dollar isn’t likely to repeat its stellar performance last year and other economies which were previously not looking so good, such as the euro zone and UK, actually have better performing currencies these days. For me, I just can’t wait for the Greek issue to be over and done with so the euro can really go back to mostly economic fundamentals instead of being weighed down by uncertainty.