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The latest Commitments of Traders forex positioning report from the CFTC shows that U.S. dollar bulls came back with a vengeance, mostly against the euro. Also, calculations done by Reuters show that the value of net long positions on the Greenback jumped from the previous week’s $21.6 billion to $28.07 billion, which is a two-and-half-month high and also marks the second consecutive week of increasing net bullish bets on the Greenback.

Keep in mind that these numbers show the net positioning of non-commercial 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 (Nov. 3, 2015)
CFTC COT Forex Positioning (Nov. 3, 2015)

Lemme break down the latest numbers for y’all:

  • Non-commercial forex traders further increased their short bets on the euro versus the Greenback from the previous week’s 176,285 figure to 207,217, giving the euro the distinction of having the largest net absolute change in positioning
  • The Swiss franc got knocked out of the winner’s circle, thanks to the number of short contracts on the Swissy doubling from 12,448 previously to 24,827 for the week ended November 3.
  • The pound and the Kiwi are still winning out against the Greenback, but the pound looks like it’s about to lose out while the Kiwi further cemented its victory with further gains in net bullish bets.
  • Speculators increased their net bearish bets on the Aussie and the Japanese yen, but forex traders seem undecided on the Loonie since it only saw a net change in positioning of 596, which is the lowest among the currencies covered.

The further increase in net long positions on the U.S. dollar was very likely due to the October 28 FOMC statement. And while U.S. Fed officials voted to keep rates on hold, their overall tone was perceived by forex traders as hawkish overall, which probably led may interest rate junkies to bet that a December rate hike is the default scenario.

Aside from pumping up demand for the Greenback, another effect of the hawkish FOMC statement was to highlight the divergence in monetary policy, which is probably why the currencies of all the member of the easy-money club got hammered.

Of all the Greenback’s forex rivals, the euro got hit the hardest, probably because the European Central Bank’s announcement during the October 22 press conference that it is now more open to further easing moves, including another rate cut was still weighing-in on the minds of forex traders.

Meanwhile, large speculators were probably betting that the Bank of England would be less upbeat in their November 5 rate statement and Inflation report due to the U.K. economy expanding less-than-expected during Q3 (0.5% actual vs. 0.6% expected, 0.7% previous), among other things.

As for the Loonie, forex traders were probably undecided on the Loonie due to a surge in oil prices that broke three weeks of declined and allowed oil prices to end the month of October on a positive note.

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.