Weekly CFTC COT Forex Positioning: A Month’s Worth of USD Gains

The Greenback enjoyed a pickup in the value of net long positions for the FOURTH week in a row, extending its positive streak to a month already. This brings net long bets up to $18.44 billion from the previous week’s $14.72 billion, according to calculations done by Reuters, representing a weekly gain of $3.72 billion.

The hawkish FOMC bias, which was reinforced during the release of their monetary policy meeting minutes and stronger than expected data (retail sales and PPI), kept the scrilla supported for the week ending October 18, 2016. Medium-tier reports and upbeat remarks from New York Fed President Dudley also added to the Greenback’s gains then.

Keep in mind that the numbers below show the net positioning of non-commercial forex traders against the U.S. dollar. 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. 

CFTC COT Forex Positioning (Oct. 18, 2016)

CFTC COT Forex Positioning (Oct. 18, 2016)

Lemme break down the latest numbers for y’all:

EUR – Bullish bets saw an increase of 13,897 from the previous week but this was offset by a larger 29,693 rise in bearish bets, causing net short euro positioning to rise for another week. This was likely due to ECB Governor Draghi’s remarks dismissing rumors that policymakers have discussed QE tapering, forcing the shared currency to return its gains ahead of the ECB decision later on.

GBP – Long positioning ticked slightly higher by 2,182 while short positioning actually fell by 1,730, resulting to an overall reduction in net bearish pound bets for the week. Pound traders booked profits off their earlier short positions as the U.K. geared up to release top-tier data and positive expectations were in play.

JPY – Non-commercial speculators are significantly less bullish on the yen, as net long bets were cut by nearly half from 68,695 the previous week to 36,991. A pickup in risk appetite, along with the lack of any updates from the BOJ, led yen traders to unwind most of their long JPY holdings.

CHF – Net bearish bets on the franc picked up, as long positioning fell 1,817 from the previous week while short positioning rose by 5,152. The franc was also hit by improvements in risk sentiment, as well as the rise in bearish euro positioning, even though Switzerland printed stronger than expected ZEW economic sentiment and PPI data during the week.

AUD – Speculators still have an upside bias on the Aussie, even increasing their net long positioning to 29,980 for the week, spurred by a rise of 7,131 in bullish bets. The Australian currency was actually off to a weak start when it reacted to the downside surprise in Chinese trade data, but it was able to make a strong comeback when Chinese inflation reports beat expectations and the RBA minutes confirmed its neutral stance.

NZD – Net short Kiwi positioning was drastically reduced, as non-commercial speculators trimmed their short bets by 9,032 from the earlier week. RBNZ rate cut expectations seemed to be losing its effect on the currency, especially since the quarterly NZ CPI surprised to the upside with a 0.2% gain instead of staying flat while the GDT auction yielded a 1.4% gain in dairy prices.

CAD – There were barely any changes in the net short Loonie bias, although it’s worth noting that long positioning fell by 7,130 while short positions saw a smaller drop of 4,536. Traders appeared to be sitting tight prior to the release of top-tier Canadian reports (CPI and retail sales) and the BOC decision later in the week.

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.