Weekly CFTC COT Forex Positioning: Comdoll Sellers Stepping Up

The latest Commitments of Traders forex positioning report from the CFTC reveals that the dollar bulls are still on the offensive. However, hedge funds and large non-commercial traders reduced their overall net bullish bets by $1.1 billion to $25.11 billion for the week ending June 30, according to data from Reuters. Forex market analysts say that the shortened trading week ahead of the Fourth of July holiday could be partly to blame for the reduction in dollar holdings.

CFTC COT Forex Positioning (June 30, 2015)

CFTC COT Forex Positioning (June 30, 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:

  • The net bearish bias on the pound declined for the third consecutive week, posting the largest absolute change in short positions
  • The yen also had a decrease in net bearish bias, having the second largest absolute change in short positions
  • The Swiss franc is still in bullish territory, but large speculators trimmed their long positions ever so slightly
  • Non-commercial traders pushed the commodity currencies even deeper into bearish territory
  • Surprisingly enough, the euro only saw a very modest increase in net bearish bias

Risk aversion was the prevailing sentiment for most of the week, thanks to the Greek drama. As a result, safe-havens such as the U.S. dollar, the yen, and the Swiss franc got some lovin’ while the high-yielding commodity currencies got the cold shoulder treatment.

Aside from risk aversion, each commodity currency also had their own particular problems: Canada’s GDP contracted and oil prices fell intraweek; Australia’s trade deficit was worse-than-expected and new home sales dipped by 2.3%; New Zealand saw the GDT price index fall by 5.9% and ANZ business outlook became pessimistic to boot.

As for the pound, it probably found more buyers when the final reading for Q1 GDP saw an upward revision. Besides, it seems to be the lesser evil among the European currencies, as the euro has the Greek debt drama on its hands while the franc could be vulnerable to SNB jawboning or intervention at any moment.

Going back to the Greek drama, one possible reason why the net bearish bias on the euro did not increase so much is that some traders opted to stay in the sidelines while others were probably still hoping for a last-minute deal, especially after Greek Prime Minister Tsipras’ leaked letter showed that he was willing to concede to the creditors’ demands. Of course, we now know that there was no deal and that the Greeks voted overwhelmingly against the creditors’ conditions.

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.