Weekly CFTC COT Forex Positioning: Yen Got Dumped!

The latest Commitments of Traders forex positioning report from the CFTC reveals that the yen had a reversal of fortune while the U.S. dollar continues to grind ever higher, with large non-commercial traders increasing their net bullish bets for the fourth consecutive week. And according to calculations done by Reuters, the value of the dollar’s net long position rose from $27.29 billion to $29.77 billion, which is the highest in six weeks.

CFTC COT Forex Positioning (July 21, 2015)

CFTC COT Forex Positioning (July 21, 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 comdolls were pushed further into bearish territory, except for the Kiwi, which finally saw a decrease in net bearish bias.
  • Non-commercial traders still remain bullish on the Swiss franc, increasing their net bullish bets ever so slightly after three consecutive weeks of declines.
  • Large speculators seems to have changed their sentiment on the pound since they trimmed their net short positions a bit.
  • Yen bears came back with a vengeance, breaking the yen’s three-week streak of decreasing net bearish bias.
  • Euro bears are still on the offensive, but increase in net short positions was slower when compared with last week.

Forex traders saw little love for the Aussie and the Loonie due probably to declining commodity prices – gold hitting a 5-year low and oil prices falling by 10%. The Kiwi, meanwhile, saw some buyers when New Zealand printed a solid improvement for its CPI reading (0.4% actual v.s. -0.3% previous). In addition, Forex Gump also mentioned that many traders were likely speculating on a 50 bps rate cut from the RBNZ, but were disappointed to see a mere 0.25% reduction.

Moving on, the dominant market sentiment for the week ending July 21 was risk aversion, which explains why the U.S. dollar and the Swiss franc remained strong. The yen, though, got dumped as hope for a proper resolution to the Greek drama and a sense of normality began to emerge when Greek banks reopened and Greece began the first round of repayments to its creditors.

Despite that, forex traders weren’t too keen to load up on the euro. Instead, they opted to load up on the pound the and U.S. dollar, probably because the U.S. and the U.K. are the only central banks that are most likely to hike rates soon.

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,

    maybe you can add one more information next time to your really good article. It would be that when we analyse net positions, it is only compared to the USD. This is crucial as traders should not make assumptions based on the report about trading crosses.

    Thanks for sharing,

    FE

    • Thanks for pointing this out! I’ll be sure to add a few lines in my next entries to remind readers that this is based on USD net positioning. See you around!

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