US Dollar Speculators trimmed their bearish bets. Euro bets drop sharply


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US Dollar Index Speculator Positions

Large currency speculators reduced their bearish net positions in the US Dollar Index futures markets this week, 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 -1,254 contracts in the data reported through Tuesday October 27th. This was a weekly gain of 412 net contracts from the previous week which had a total of -1,666 net contracts.

This week’s net position was the result of the gross bullish position (longs) going up by 687 contracts (to a weekly total of 18,755 contracts) compared to the gross bearish position (shorts) which saw a lesser increase by 275 contracts on the week (to a total of 20,009 contracts).

The US Dollar Index speculators reduced their bearish positions on Tuesday as positions improved for the third time in the past four weeks. The US Dollar position currently sits in a small bearish position for a second week after bets briefly emerged into a small bullish standing on October 13th. Overall, the dollar positioning has been in bearish territory for nineteen out of the past twenty weeks following an amazing run of one hundred and nine straight weeks (from May of 2018 to June 2020) in bullish territory previously.


Individual Currencies Data this week: Euro bets drop sharply

In the other major currency contracts data, we saw just one substantial change (+ or – 10,000 contracts) in the speculators category this week.

Euro speculators dropped their bullish bets for the fifth consecutive week this week and for the seventh time in the past nine weeks. This recent decline follows a previous and steady surge (from March to August) in bullish bets that pushed the net position to an all-time record high level on August 25th with a total of +211,752 contracts. Since the record high, bets have tumbled by a total of -56,197 contracts and has now brought the current standing to the lowest level in the past fourteen weeks, dating back to July 21st. Overall, the euro bets have now been in bullish territory for thirty-three consecutive weeks.

Overall, the major currencies that saw improving speculator positions this week were the US dollar index (412 weekly change in contracts), Japanese yen (3,710 contracts), Swiss franc (1,104 contracts), Canadian dollar (1,006 contracts), Australian dollar (2,135 contracts), New Zealand dollar (393 contracts) and the Mexican peso (8,104 contracts).

The currencies whose speculative bets declined this week were the euro (-10,388 weekly change in contracts) and the British pound sterling (-4,660 contracts).


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

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:

CurrencyNet Speculator PositionSpecs Weekly Change
USD Index-1,254412
EuroFx155,555-10,388
GBP-6,660-4,660
JPY17,8933,710
CHF15,5031,104
CAD-18,0691,006
AUD8,8902,135
NZD6,995393
MXN27,9468,104

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 Trader Weekly Positions vs Price

EuroFX:

The Euro large speculator standing this week resulted in a net position of 155,555 contracts in the data reported through Tuesday. This was a weekly reduction of -10,388 contracts from the previous week which had a total of 165,943 net contracts.


British Pound Sterling:

The large British pound sterling speculator level recorded a net position of -6,660 contracts in the data reported this week. This was a weekly fall of -4,660 contracts from the previous week which had a total of -2,000 net contracts.


Japanese Yen:

Large Japanese yen speculators equaled a net position of 17,893 contracts in this week’s data. This was a weekly rise of 3,710 contracts from the previous week which had a total of 14,183 net contracts.


Swiss Franc:

The Swiss franc speculator standing this week reached a net position of 15,503 contracts in the data through Tuesday. This was a weekly boost of 1,104 contracts from the previous week which had a total of 14,399 net contracts.


Canadian Dollar:

Canadian dollar speculators came in at a net position of -18,069 contracts this week. This was a increase of 1,006 contracts from the previous week which had a total of -19,075 net contracts.


Australian Dollar:

The large speculator positions in Australian dollar futures was a net position of 8,890 contracts this week in the data ending Tuesday. This was a weekly boost of 2,135 contracts from the previous week which had a total of 6,755 net contracts.


New Zealand Dollar:

The New Zealand dollar speculative standing totaled a net position of 6,995 contracts this week in the latest COT data. This was a weekly rise of 393 contracts from the previous week which had a total of 6,602 net contracts.


Mexican Peso:

Mexican peso speculators resulted in a net position of 27,946 contracts this week. This was a weekly lift of 8,104 contracts from the previous week which had a total of 19,842 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).

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