Weekly CFTC COT Forex Positioning: Dollar Bulls Retreating?

Uh oh, are dollar bulls getting exhausted? The latest Commitments of Traders forex positioning report from the CFTC revealed that long dollar positions were reduced by $10.88 billion as of last week, bringing net bullish bets to just $23.82 billion — its lowest level in almost a year.

CFTC COT Forex Positioning (June 16, 2015)

CFTC COT Forex Positioning (June 16, 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 latest numbers for y’all:

  • Non-commercial traders remained bullish on the U.S. dollar against the euro, pound, yen, and the commodity currencies. However, net positions were trimmed to reflect a weaker bullish dollar bias.
  • Speculators stayed net bullish on the Swiss franc but reduced their long positions as well.
  • Euro and yen short positioning showed the largest absolute changes, indicating a significant shift to a less bearish bias on both currencies.
  • Among the commodity currencies, the Aussie saw the largest shift to a less bearish bias by large non-commercial speculators.

Most forex traders probably decided to take it easy with their long dollar positions ahead of the June FOMC statement then, reducing their exposure to a top-tier market event. Several speculators were probably anticipating cautious remarks from Fed head Janet Yellen, who has a knack for downplaying impressive economic improvements and keeping rate hike expectations in check.

As in the previous weeks, euro bulls kept their fingers crossed that the Greek government and its creditors would be able to come up with a reform deal and allow Greece to avoid defaulting on its loans. Around that time, there were a lot of meetings scheduled between the debt negotiation teams (but we all know how that turned out). Apart from that, the euro zone has also been able to print mostly upbeat economic data, signaling that the ECB’s easing efforts are working their magic.

As for the Japanese yen, Kuroda’s comments that week probably played a big role in leading forex traders to pare their short yen holdings. After all, he did say that the currency had been able to correct its excessive gains, hinting that the BOJ is no longer looking to jawbone or implement measures to spur yen depreciation.

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,

    I think your analysis fits perfect to our discussion from last week when we said the USD might be sexy but not as sexy as it was before 🙂

    All the best,
    ForExchange

    • Hahaha yes, I’ve been waiting for you to say that! The yen is looking much sexier these days compared to USD 🙂