Head of Commodity Strategy
Summary: The Commitments of Traders reports highlight speculators positions and changes made during the week to June 9 in FX, bonds and stocks. Appetite for risk temporarily received a knock amid worries around a re-acceleration of COVID-19 cases and continued uncertainty around the speed of recovery. Despite general dollar strength speculators accelerated their broad selling with the Greenback short doubling to levels last seen two years ago.
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 such as hedge funds and CTA’s across forex, bonds and stocks up until last Tuesday, June 16. Appetite for risk temporarily received a knock amid worries around a re-acceleration of COVID-19 cases and continued uncertainty around the speed of the U.S. and the global recovery. The S&P 500 ended the reporting week down 2.4% while the yield on U.S. ten-year notes reversed lower to their established 0.6% to 0.8% range.
Speculators almost doubled bearish bets on the Greenback, this despite seeing the dollar rise by 0.7% against an index of currencies. The combined dollar short against ten IMM currency futures and the Dollar Index jumped by $8.4 billion to $16.8 billion, the highest since May 2018.
The heavy selling was broad-based but with the bulk of the flow mostly benefiting the euro and Australian dollar. The euro net-long reached €14.6 billion, the highest since May 2018 while the Australian dollar’s 28% rally from the March low supported a further cut in the net short to 6.5 lots, also the lowest since May 2018. Despite the risk off theme driving markets during the week, the Mexican peso position managed to flip back to long and a 13-week 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.
