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Another week is behind us, so it’s time to dissect the CFTC’s weekly COT report.  Ring a bell?  If not, head over to the School for a refresher – Commitment of Traders Report.  If that sharp brain of yours knows all about the report, but can’t remember how to use the report for trading, well, we have an app… I mean lesson, for that: How to use the COT Report for Trading.  That was a tough one, I know.

Now back to the report, which can be found in the raw at the CFTC website.  My goodness is the raw report taking me back to dot matrix printers of the 80’s.  I’ve taken the unsightly report from the CFTC and slapped some “21st century” onto it.

CFTC COT Forex Positioning Raw Numbers
CFTC COT Forex Positioning Raw Numbers

A quick scan of the lovely chart above is that non-commercial traders increased their net short positions on the Japanese yen, euro and Swiss franc, while continuing to stay net long on the British pound, Aussie dollar, New Zealand dollar and Canadian dollar.  In terms of broad risk sentiment, it looks like the recent geopolitical tensions in Ukraine and the Middle East, and recent weak global economic data don’t have traders spooked enough to move more capital into safe haven areas of the financial markets.

Now take your eye to the yellow lines on the chart.  You’ll notice considerable changes in net positions week-over-week for the Japanese yen and the euro.  When comparing the previous week’s raw data to the most recent, we see an increased shift to short positions for both JPY and EUR.  Besides broad risk sentiment, weak data has been creeping up for both Japan and the Eurozone, and in the latter’s case, the long held sentiment that we’ll see more easing from the ECB continues to have a strong hold on forex traders.

Besides the mounting bearish attitude towards the EUR, JPY and CHF, the market has been shifting to a progressively bullish view of USD (thanks to improving U.S. economic data noticed by the FOMC).  And it also appears that CAD, AUD and NZD sentiment–while still bullish–is waning a bit; most likely on recent weak data from the comdolls, including recent employment sector reports.

COT Forex Positioning Update
COT Forex Positioning Update

With summer trading conditions still in play and a lack of monetary policy changes not seen for the foreseeable future, these positioning trends may continue.  What do you think?

Feel free to share your thoughts on the most recent COT Report below in the comments section.  If you’re looking for further discussion, community member ForExchange has a lively thread, Trading based on Market Sentiment, in the Forums waiting for your participation.  Have a read!  As always, happy trading.