Head of Commodity Strategy
Summary: Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to Tuesday, October 18. A week that saw stocks rebound after a solid start to the corporate-earnings season helped offset continued growth worries. The dollar traded softer and bond yields higher while commodities adopted a defensive stance with the biggest amount of net selling hitting crude oil, gold, corn and coffee.
This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to Tuesday, October 18. A week that saw stocks rebound from oversold levels after a solid start to the corporate-earnings season helped offset continued worries about how far central banks are prepared to hike rates in order to combat inflation through forcing a reduction in economic activity.
The Bloomberg Commodity index lost 3.2% during the reporting week with losses being led by the energy sector where the market reversed some of the gains seen in the previous week when OPEC and Russia announced their surprise production cut. Natural gas slumped 13% on the week while renewed yield strength and economic worries sent most metals sharply lower with funds reversing back to net short position in gold, silver and copper.
Responding to these developments, speculators cut their total exposure across 23 major commodity futures by 7% to 1.037,869 contracts with the biggest amount of net selling hitting crude oil, gold, corn and coffee with buying concentrated in soybean oil, sugar and hogs.
In forex, flows remained mixed during a week that saw the dollar index trade softer by 1% after recently hitting a 20-year high. Overall the gross dollar long against nine IMM currency futures and the Dollar index rose by 5% to $15 billion, primarily driven by heavy JPY selling as the under siege currency dropped 2.3% towards the important 150 level. Elsewhere, a recovering Sterling saw net selling with speculators reducing the gross long more than offsetting fresh short selling.
Speculators continued to buy euros and since August 30 when EURUSD traded around €1 they have bought €12 billion, driving their net futures exposure from a 48k lots short to a 48k lots long, a four-month high.
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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.
Uncover the shifting focus in 2024's FX markets towards growth resilience and relativity, away from bond yields and inflation stories.
Embrace the metal revolution on the commodity market in the coming year, with a focus on gold, silver, platinum, copper, and aluminum.
The gloominess of geopolitical conflicts and the repetitive nature of political agendas. What else does 2024 hold in store for us?
The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.
Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.
