COT: Speculators continue to sell dollars and buy gold

Commodities 5 minutes to read

Ole Hansen

Head of Commodity Strategy

Summary:  The weekly Commitments of Traders (CoT) covering the week to July 2, delayed due to last weeks 4th July holiday was released yesterday. The below summary highlights the major changes that occurred in commodities, forex, bonds and stocks. Please find the attached PDF’s for additional information.


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: Commodity report for the week ending July 2, click here

To download your copy of the Commitment of Traders: Forex report for the week ending July 2, click here.

To download your copy of the Commitment of Traders: Financials report for the week ending July 2, click here.


Commodities

Speculators bought WTI and sold Brent crude oil following the G20 meeting in Osaka and the decision by Opec+ to extend production cuts for another nine months. The net long in Brent, the global benchmark, has now following eight weeks of selling dropped to a five-months low. This as demand worries continue to outweigh production cuts and geopolitical risks.

Gold buying continued albeit at a slower pace than the previous four weeks. During this time the net-long has jumped by 208k lots to reach 241k lots, the highest since September 2017. The long versus short ratio reached 15 leaving the contract vulnerable to a short-term correction. Not least following the creation of two long tails and a double top on the weekly chart. Silver’s lack of momentum resulted in a small 7% reduction in the net-long to 22k lots.
Nine weeks of corn buying paused after the June 28 acreage report threw a spanner in the works. The on paper bearish but, probably not report helped trigger a small 3% reduction in the net-long. Continued concerns relating to slow growing pace and with that a delayed (early frost exposed) harvest kept the long side immune from the selling with fresh short positions providing the change. 

In soft commodities the most noticeable change was the 50% reduction in the Arabica coffee net-short to 15k lots, the lowest since September 2017.

Forex

Speculators cut their gross dollar long against ten IMM currency futures by $7.4 billion to just $12.4 billion, the lowest since June 2018. Bullish dollar bets have now been cut by 65% since the end of April peak. 
The dollar selling was broad-based but concentrated against EUR ($3.5bn), JPY ($1bn) and CAD ($1.6bn). The latter turned bullish for the first time since March 2018 while speculators were the least bearish on the JPY since June 2018. GBP and MXN being the two exceptions as they were both sold. 
Financials
What is the Commitments of Traders report?

The Commitments of Traders (COT) report is issued by the US Commodity Futures Trading Commission (CFTC) every Friday at 15:30 EST with data from the week ending the previous Tuesday. The report breaks down the open interest across major futures markets from bonds, stock index, currencies and commodities. The ICE Futures Europe Exchange issues a similar report, also on Fridays, covering Brent crude oil and gas oil.

In commodities, the open interest is broken into the following categories: Producer/Merchant/Processor/User; Swap Dealers; Managed Money and other.

In financials the categories are Dealer/Intermediary; Asset Manager/Institutional; Managed Money and other.

Our focus is primarily on the behaviour of Managed Money traders such as commodity trading advisors (CTA), commodity pool operators (CPO), and unregistered funds.

They are likely to have tight stops and no underlying exposure that is being hedged. This makes them most reactive to changes in fundamental or technical price developments. It provides views about major trends but also helps to decipher when a reversal is looming.
Disclaimer

Saxo Capital Markets (Australia) Pty Ltd prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Combined Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Pty Ltd.
Level 25, 2 Park Street
NSW 2000
Sydney
Australia

Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Pty Ltd ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Combined Financial Services Guide & Product Disclosure Statement to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as CFDs and Margin FX products may result in your losses surpassing your initial deposits. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.
Please click here to view our full disclaimer.