Quarterly Outlook
Q4 Outlook for Investors: Diversify like it’s 2025 – don’t fall for déjà vu
Jacob Falkencrone
Global Head of Investment Strategy
COT report: how speculators positioned ahead of 2026
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, 30 December 2025.
- The non-commercial dollar short against eight IMM FX futures jumped by one-third ahead of year-end to levels last seen in July, led by renewed demand for EUR, AUD and CAD.
- Despite some late-year buying, combined net-long positions across the three major crude oil futures ended at the weakest year-end level on record.
- The powerful rally across precious metals and PGMs—particularly during the second half of the year—was accompanied by a gradual reduction in net-long positions held by leveraged accounts
Our weekly Commitment of Traders (COT) update has finally returned with CFTC having published its first up-to-date report since the US government shutdown in October caused a prolonged reporting delay. The report highlights futures positions and changes made by hedge funds and other speculators across commodities and forex during the week to last Tuesday, 30 December 2026, giving us an idea how speculators positioned themselves during a period of low liquidity ahead of year end.
Forex:
The non-commercial dollar short against eight IMM FX futures jumped by one-third ahead of year-end to USD 10.5 billion, returning the gross short to levels last seen in July. In the intervening months, a bout of short covering drove a sharp reversal, culminating in early November when the market briefly flipped to a USD 14.3 billion net long, before selling pressure re-emerged.The latest bout of dollar selling has been most pronounced against the euro, followed by the AUD and CAD—two commodity-linked currencies. This has extended a seven-week reduction in their respective net shorts to USD 3.7 billion in AUD and USD 8.3 billion in CAD, with the latter marking a 21-month low. The euro remains by far the largest long against the greenback, with speculators, despite a small among of net selling last week, having added the equivalent of USD 10 billion over the past five weeks, lifting the net long to 157k contracts, close to an August 2023 high.
Meanwhile, the JPY long has begun to recover after months of net selling from a May 2025 peak of 179k contracts to a small net short last month, before flipping back to a small net long in the latest reporting week.
Commodities
The commodities sector returned close to 16% last year, according to the Bloomberg Commodity Total Return Index. While a strong headline performance, gains were highly concentrated in a small group of contracts, most notably silver (+139%), gold (+62%), copper (+39%), cattle (+32%) and coffee (+28%). A clear and persistent theme through the year was investor preference for metals at the expense of energy.
Despite some late-year buying, combined net-long positions across the three major crude oil futures ended the year at just 113k contracts. This marked the weakest year-end expression of bullish conviction on record, with the majority of remaining exposure concentrated in Brent crude.
The powerful rally across precious metals and PGMs—particularly during the second half of the year—was accompanied by a gradual reduction in net-long positions held by leveraged accounts. Rather than reflecting waning conviction, this adjustment largely stemmed from rising prices forcing traders to scale back positions in order to maintain stable nominal exposure. As a result, COMEX gold ended the year with a net long of 127k contracts, down from a January peak of 234k. Even so, the position still represented a nominal value of around USD 56 billion, by far the largest across the 25 major futures tracked. This was followed by copper at around USD 11 billion, Brent crude, and silver at USD 6.5 billion. In next week’s update, we will take a closer look at how recent US actions in Venezuela have impacted positioning. We will also revisit the agricultural sector, where significant developments unfolded during the reporting blackout caused by the government shutdown. Not least soybeans, which experienced a sharp round-trip move—surging on speculative buying amid hopes of renewed Chinese demand, before slumping just as quickly when expected orders failed to materialize.
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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.
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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