Quarterly Outlook
Q4 Outlook for Investors: Diversify like it’s 2025 – don’t fall for déjà vu
Jacob Falkencrone
Global Head of Investment Strategy
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COT report: Speculative flows in FX and commodities post-Fed decision
Ole Hansen
Head of Commodity Strategy
Key points:
- Our weekly Commitment of Traders update highlights futures positions and changes made by hedge funds across forex and commodities during the week ending Tuesday, 23 September 2025.
- Speculators responded to post-FOMC dollar strength by adding longs in CHF, GBP, and JPY, lifting the overall gross dollar short by 10%.
- Precious metals and livestock were the only sectors trading higher during the FOMC rate-cutting week, while softs and energy led broad declines.
- Precious metals extended their strong run, with light profit-taking in gold offset by continued modest net buying in silver and platinum.
- In grains, speculators held the largest seasonal short on record, marking the first time in 20 months that net short positions were held across all six grains and oilseeds contracts.
Forex
The latest reporting week captured the market’s response to the resumption of US rate cuts, a well-anticipated move that left the dollar index up around 0.6% as of last Tuesday. All eight IMM futures tracked in this update traded lower, led by weakness in NZD, AUD and GBP. However, speculators used the pullback to add exposure, lifting the overall gross dollar short by 10% to USD 8.7 billion. This was driven by increased length in CHF, GBP and especially JPY, only partly offset by net selling in EUR, CAD and the antipodeans.
The standout was MXN, where the net long climbed to a 15-month high at 83.4k contracts, far above the five-year average of around 27k contracts and the only position stretched relative to long-term norms.
Commodities
Overall, the Bloomberg Commodity Index fell 1.5% during the reporting week to just before broad strength, as we highlighted in our latest “Commodity Weekly,” drove prices to a strong end-of-week finish and towards the highest monthly close since May 2022.
Precious metals and livestock were the only two sectors trading higher during the FOMC rate-cutting week to 23 September, while the rest suffered notable setbacks. Softs led the decline, slumping 8.1% on the back of a 14.5% drop in Arabica coffee. Grains also faced broad selling pressure, as harvest flows and weak Chinese demand pushed managed money accounts into net short positions across all six major CME-traded contracts for the first time in 20 months, while the combined net short was the highest ever recorded for this period.
In energy, sellers returned to Brent and WTI, though the 19.3k contract reduction—driven primarily by long liquidation rather than new short positions—was modest compared with the 53.4k contracts added the previous week.
Precious metals extended their strong run, prompting light profit-taking in gold alongside continued modest net buying in silver and platinum. In copper, managed money lifted the net long to a 15-month high of 44.5k contracts, just ahead of Freeport’s force majeure announcement following the accident at its Grasberg mine in Indonesia.
What is the Commitments of Traders report?
The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.
Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
Forex: A broad breakdown between commercial and non-commercial (speculators)
The main reasons why we focus primarily on the behavior of speculators, such as hedge funds and trend-following CTA's are:
- 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
Do note that this group tends to anticipate, accelerate, and amplify price changes that have been set in motion by fundamentals. Being followers of momentum, this strategy often sees this group of traders buy into strength and sell into weakness, meaning that they are often found holding the biggest long near the peak of a cycle or the biggest short position ahead of a through in the market.
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This content is marketing material and should not be regarded as investment advice. Trading financial instruments carries risks and historic performance is not a guarantee of future results.
The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options..
The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options..
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