Weekly CFTC COT Forex Positioning: Greenback Still on the Attack!

The latest Commitments of Traders forex positioning report from the CFTC reveals that the U.S. dollar is still going strong, with net longs rising for the third consecutive week. According to calculations done by Reuters, net long positions for the week ending July 14 rose from $25.76 billion to $27.29 billion, chalking up the largest increase in five weeks.

CFTC COT Forex Positioning (July 14, 2015)

CFTC COT Forex Positioning (July 14, 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:

  • Overall, large non-commercial traders are still bullish on the U.S. dollar against most currencies, except for the Swiss franc, but traders have been trimming their long positions on the franc for the third consecutive week now.
  • Net short yen positions decreased for the third consecutive week. The yen was also the only currency that saw a decrease in net bearish bias for the week ending July 14.
  • Euro bears are back on the offensive after losing some ground to the bulls last week.
  • Large speculators further increased their net short positions on the Aussie and the Loonie, but seem reluctant to do the same for the Kiwi.
  • Bearish sentiment on the pound seems to have weakened since it only saw a slight decrease in net bearish bias.

Risk aversion was the name of the game due to the Chinese stock market meltdown and the Greek drama. As for the latter, there were a lot of uncertainties leading up to and beyond July 14. In particular, market watchers had been buzzing about the revised bailout proposal which contained harsher austerity measures and whether or not the Greek parliament would vote in favor of a deal by the July 15 deadline. Because of these, the euro naturally found little love from forex traders.

Given the risk-off sentiment, forex traders fled to the the lower-yielding currencies such as the U.S. dollar, the yen, and the Swiss franc, with most non-commercial speculators favoring the yen above the rest. The high-yielding commodity currencies, on the other hand, were shunned. Even European session traders weren’t too happy about the RBA’s rate decision while the Loonie was under pressure due to declining oil prices stemming from the Iran nuclear deal.

As for the pound, despite disappointing manufacturing and inflation data, the pound only saw a slight decrease in net bearish bias. This can probably be attributed to Bank of England Governor Mark Carney’s speech when he said that the “point at which interest rates may begin to rise is moving closer,” which is like music to the ears of interest rate hike junkies and short-term momentum players.

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.