Tue, Sep 27, 2022 @ 05:44 GMT
HomeContributorsFundamental AnalysisCommitment of Traders Report (COT): Traders Most Bullish on DXY in 5-Years

Commitment of Traders Report (COT): Traders Most Bullish on DXY in 5-Years

Traders aggressively increased their net-long exposure to the US dollar index (DXY) ahead of last week’s FOMC meeting.

Commitment of traders – as of Tuesday 28th June 2022:

  • Positioning among FX majors were relatively small last week, with all currencies seeing a change below +/- 10.1k contracts.
  • Large speculators trimmed their net-short exposure to GBP, EUR and JPY futures, and increased net-long exposure to CAD and net-short exposure to AUD futures.
  • Traders were their least bearish on yen futures since June 2021.

Japanese yen futures (JPY):

Traders have continued to reduce their short exposure to Japanese yen futures, with net-short exposure now at its least bearish level since December 2021. It’s plausible to assume that some investors are becoming nervous of being short the yen after such a strong move, and amidst growing speculation that the BOJ (Bank of Japan) may look to adjust their YCC (yield curve control) target of the 10-year government bond. It is therefore interesting that USD/JPY remains near its 23-year high whilst short exposure to the yen is removed, because it suggests that either USD/JPY may be overvalued, or bears may return if they later feel they were wrong to close out their shorts, which could then send USD/JPY higher.

Commitment of traders – as of Tuesday 28th June 2022:

  • Large speculators were their most bearish on copper futures since March 2020.
  • Traders were their least bullish on silver futures since June 2019.
  • Large speculators flipped to net-short exposure on platinum futures.

Copper futures (HG):

Copper investors don’t appear to be hanging around to see if we will actually enter a recession. Large speculators are now their most bearish on copper futures since March 2020 and gross shorts have increased for a third week at 78.5k contracts short. If gross short exposure rises above 81.2k contracts, it will be at least a 27-month high. Managed funds have an equally grim view on copper with net-short exposure at its most bearish level since April 2020.

DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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