Head of Commodity Strategy
Summary: Speculators increased their dollar long against nine IMM currency futures to a fresh 21-months high last week.
Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.
To download your copy of the Commitment of Traders: Forex report for the week ending October 2, click here.
To download your copy of the Commitment of Traders: Financials report for the week ending October 2, click here.
IMM Currency futures
Speculators increased their dollar long against nine IMM currency futures to a fresh 21-months high last week.
The dollar buying was concentrated against the euro on continued Italy focus and not least the yen on the widening yield gap. Small (dollar) selling, meanwhile, was seen against the other seven currencies. Surprisingly, the CAD net-short only saw a small net reduction despite the new NAFTA deal and surging oil prices.
Financials:
Leveraged funds cut their short exposure to the US yield curve in the week to October 2. Short-covering in 5s and 10s more than offset selling at the front and far end of the curve.
These changes occurred the day before US 10 year yields surged by the most since the 2016 US presidential election. This was in response to strong economic data and hawkish comments from the US Fed on the future direction of short-term interest rates.
Short-covering cut the net-short in S&P by 15% and the Nasdaq by 75% while only small changes were seen in the C’boe VIX position.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
