Head of Commodity Strategy
To download your copy of the Commitment of Traders: Forex report for the week ending June 19, click here.
To download your copy of the Commitment of Traders: Commodities report for the week ending June 19, click here.
To download your copy of the Commitment of Traders: Financials report for the week ending June 19, click here.
Forex
The speculative dollar position against nine IMM currency futures saw the biggest bullish shift on record in the week to June 19. After buying a record $17.5 billion, traders ended up holding a gross dollar long for the first time in a year. Just two months ago traders held a record dollar short of almost $29 billion, with the vast majority being against a EUR long. The belief in a stronger euro finally received a knock during the week where the Federal Open Market Committee raised rates and the European Central Bank maintained its dovish stance.
The AUD net-short reached an 18-month high while the JPY position flipped to a net-short. Bearish bets on the Mexican peso almost halved as the currency bounced. With the sheer amount of new positions now looking for continued dollar strength, failure risks triggering a reversal. Last week the euro found support ahead of €1.15 while the dollar index ran out of buyers above 95 so there's potentially an interesting week ahead.
Commodities
Hedge funds cut bullish commodities bets by 14% or 248,357 lots in the week to June 19. The biggest changes were seen across metals and grains where longs were trimmed and fresh shorts added. This came in response to continued dollar strength as well as growth and demand concerns due to heightening trade tensions together with improved US growing conditions for key crops.
The energy sector had a relatively quiet week with funds cutting both long and short positions ahead of the June 22 Opec meeting.
The sharp sell-off across the metals space on June 15 helped trigger a 64% reduction in bullish gold bets to 23.5k lots, a 2½–year low. The eight-fold increase in silver longs the previous week led to a 30% reduction while bearish platinum bets hit a record 25k lots.
Dollar strength, improved US growing conditions and not least trade war fears helped send the combined position in the three major crops of corn, wheat and soybeans back to a net short. During the past three weeks funds sold a combine 352k lots with soybeans and not least corn being the hardest hit.
Financials
In fixed income, leveraged funds made a small reduction in bearish bond bets during the week where the FOMC hiked rates, US 10-year yields reached a low of 2.85% in response to escalating trade tensions and the curve continued to flatten.
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.
