After net bullish USD bets were brought down to their lowest level in nearly a year the other week, the latest Commitments of Traders forex positioning report from the CFTC reveals that the dollar bulls are back and on the attack, pushing the net bullish bets higher by $2.25 billion to $26.07 billion.
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:
- Large speculators are still bullish on the U.S. dollar against the euro, pound, yen, and the commodity currencies.
- Non-commercial traders had a stronger bullish bias on the Swiss franc.
- The euro and the yen fell deeper into bearish territory, showing the largest absolute changes in short positioning.
- The commodity currencies also tumbled further into bearish territory from the previous week.
- The pound was the only currency that saw a slight decrease in net bearish bias; this is the second consecutive week that speculators trimmed their short positions
Forex traders probably resumed dumping the euro, as Greece and its creditors remained in a deadlock despite the looming IMF deadline. Of course, we now know that Tsipras’ leftist government refused the creditors’ terms, opting to call a referendum instead. Also, the apparent bank run finally forced the imposition of capital controls on Greek banks.
Risk aversion due to the Greek crisis likely caused forex traders to flee to the safe-haven currencies such as the Swiss franc, although bullish bias on the Swiss franc remained relatively subdued since the Swiss National Bank (SNB) reiterated its promise “to take an active role in the foreign exchange market.”
As a safe-haven currency, the U.S. dollar got some loving, too. Non-commercial traders didn’t seem to be too bothered by the FOMC’s lack of commitment to a September rate hike. Meanwhile, pound bulls stepped on the gas after seeing stronger than expected wage growth for May, even when the claimant count change missed expectations.
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.