US Dollar Index Speculators go bearish for 1st time in 110 weeks. Euro, AUD bets jump

June 20, 2020

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US Dollar Index Speculators Go Bearish:

Large currency speculators strongly cut back on their bets this week and dropped their US Dollar Index futures positions into bearish territory, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of US Dollar Index futures, traded by large speculators and hedge funds, totaled a net position of -5,344 contracts in the data reported through Tuesday June 16th. This was a weekly reduction of -10,033 contracts from the previous week which had a total of 4,689 net contracts.

This week’s net position was the result of the gross bullish position (longs) decreasing by -10,080 contracts (to a weekly total of 10,796 contracts) compared to the gross bearish position (shorts) which saw a fall by just -47 contracts on the week (to a total of 16,140 contracts).


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The US Dollar Index speculative bets have taken a dramatic turn into a trend of weakening sentiment for the American currency. Speculator positions fell this week for a fourth straight week and by a total of -22,641 contracts in just these past four weeks. The sharp selloff this week pushed the net position into bearish territory (-5,344  contracts) for the first time in 110 weeks, dating all the way back to May 8th of 2018. The US Dollar Index price has also been weakening over the past five weeks with the price dropping from over 100 on May 18th to a close around 97.65 this week.


Individual Futures Currencies Data this week: Euro, AUD & Peso bets jump

In the other major currency contracts data, we saw many large movements and four substantial changes (+ or – 10,000 contracts) in the speculators category this week.

Euro Speculators sharply raised their bullish bets this week and pushed the bullish position to the highest level since May 8th of 2018. The bullish position has risen for four straight weeks and by a total of +44,570 contracts in that time-frame. Overall, the euro has had a remarkable run in the past fifteen weeks going from a total of -12667 contracts on March 10th to a total of +117,132 contracts this week.

Australian dollar positions saw a surge of bets this week that brought the current bearish position to the lowest level in the past 111 weeks. Net positions jumped by +30,043 contracts this week to bring the overall standing into a small bearish standing. The last time AUD bets have been in bullish territory is March 27th of 2018.

Mexican peso positions got a boost this week and managed to escape bearish territory. Peso speculator bets rose by over +22,000 contracts this week and flipped the overall position from a small bearish level (-846 contracts) into the highest bullish level (+22,106 contracts) of the past thirteen weeks. Peso positions have been on a steep decline since hitting a record high bullish position on January 28th at +170,366 contracts. Following that record high, peso positions have dropped by a total of -148,260 net contracts in the last 20 weeks.

Overall, the major currencies that saw improving speculator positions this week were the euro (21,483 weekly change in contracts), British pound sterling (8,050 contracts), Japanese yen (4,648 contracts), Australian dollar (30,043 contracts), New Zealand dollar (9,309 contracts) and the Mexican peso (22,952 contracts) .

The currencies whose speculative bets declined this week were the US dollar index (-10,033 weekly change in contracts), Swiss franc (-160 contracts) and the Canadian dollar (-657 contracts).


Chart: Current Strength of Each Currency compared to their 3-Year Range

US Dollar Index Speculators go bearish

The above chart depicts each currency’s current speculator strength level compared to data of the past 3 years. A score of 0 percent would mean speculator bets are currently at the lowest level of the past three years. A 100 percent score would be at the highest level while a 50 percent score would mean speculator bets are right in the middle of the data (a neutral score). We use above 80 percent (extreme bullish) and below 20 percent (extreme bearish) as extreme score measurements.

Please see the data table and individual currency charts below.


Table of Large Speculator Levels & Weekly Changes:

Currency Net Speculator Position Specs Weekly Change
USD Index -5,344 -10,033
EuroFx 117,132 21,483
GBP -15,998 8,050
JPY 22,110 4,648
CHF 1,606 -160
CAD -25,486 -657
AUD -6,532 30,043
NZD -1,932 9,309
MXN 22,106 22,952

 

This latest COT data is through Tuesday and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the dollar will gain versus the euro.

 


Weekly Charts: Large Currency Trader Weekly Positions vs Price

EuroFX:

The Euro large speculator standing this week equaled a net position of 117,132 contracts in the data reported through Tuesday. This was a weekly advance of 21,483 contracts from the previous week which had a total of 95,649 net contracts.


British Pound Sterling:

The large British pound sterling speculator level was a net position of -15,998 contracts in the data reported this week. This was a weekly lift of 8,050 contracts from the previous week which had a total of -24,048 net contracts.


Japanese Yen:

Large Japanese yen speculators was a net position of 22,110 contracts in this week’s data. This was a weekly increase of 4,648 contracts from the previous week which had a total of 17,462 net contracts.


Swiss Franc:

The Swiss franc speculator standing this week came in at a net position of 1,606 contracts in the data through Tuesday. This was a weekly fall of -160 contracts from the previous week which had a total of 1,766 net contracts.


Canadian Dollar:

Canadian dollar speculators reached a net position of -25,486 contracts this week. This was a reduction of -657 contracts from the previous week which had a total of -24,829 net contracts.


Australian Dollar:

The large speculator positions in Australian dollar futures resulted in a net position of -6,532 contracts this week in the data ending Tuesday. This was a weekly advance of 30,043 contracts from the previous week which had a total of -36,575 net contracts.


New Zealand Dollar:

The New Zealand dollar speculative standing came in at a net position of -1,932 contracts this week in the latest COT data. This was a weekly gain of 9,309 contracts from the previous week which had a total of -11,241 net contracts.


Mexican Peso:

Mexican peso speculators equaled a net position of 22,106 contracts this week. This was a weekly boost of 22,952 contracts from the previous week which had a total of -846 net contracts.


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*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).