Head of Commodity Strategy
Summary: This Commitments of Traders report highlights futures positions and changes made by speculators in forex, bonds and stocks up until last Tuesday, August 25. A week that saw a continued rally in U.S. stocks with the S&P 500 adding another 1.6%. Specs continued to sell dollars despite seeing the Greenback rise for a second week while bonds held steady ahead of Fed chair Powell's speech last Thursday
Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.
This summary highlights futures positions and changes made by speculators in forex, bonds and stocks up until last Tuesday, August 25. A week that saw a continued rally in U.S. stocks with the S&P 500 adding another 1.6%. The dollar rose for a second week while bonds held steady ahead of Fed chair Powell’s speech last Thursday.
Following a brief pause, speculators resumed their dollar selling during the week to August 25, a week where the Greenback actually recorded broad gains against the ten IMM currency futures and the Dollar Index tracked in this. The net dollar short rose by $2.6 billion to reach $34.8 billion and we have to go back more than nine year to find a similar level of aggressive dollar selling.
As per the table below it is however clear, that speculators increasingly have put all their eggs in one basket and bet on further strength of the euro. The euro net-long reach a fresh record of 211,752 lots, the equivalent of €26.5 billion. The increase was primarily driven by short sellers throwing in the towel after the gross short saw a 11,992 lots reduction to a nine-year low at just 50,309 lots.
Elsewhere additional buying of the JPY and continued short covering of the CAD made up the rest of the buying while some selling of CHF and GBP reduced the overall impact.
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.
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