Saxo Bank publishes Trader Engagement Reports (COTs) on a weekly basis covering leveraged fund positions in commodities, bonds and stock index futures. For IMM and VIX currency futures, we use the larger measure called non-trading.
The summary below highlights the futures positions and the changes made by commodities, forex and financials hedge funds until Tuesday May 25th. A week where a dollar stable near a four-month low and lower bond yields, driven by inferred inflation expectations helped lower volatility and raise equity markets. The week under review also caught the backdrop of the recent correction in commodities, mainly driven by weakness in industrial metals on fears of Chinese intervention and a sharp correction in grains.
The Bloomberg Commodity Index fell 1.9% in the week under review to last Tuesday, with heavy losses in industrial metals (-4.2%) and grains (-5.2%) offsetting the continued gains in precious metals and cattle. In response to these developments, hedge funds reduced bullish bets on 24 futures contracts to 2,286,000 lots by 6%, a six-week low. With the exception of gold and WTI, crude oil sales were strong, with the largest reductions seen in natural gas, Brent crude oil, HG copper, soybeans and corn.
Speculators bought WTI crude oil (+18k lots) and sold Brent (-27.5), leaving the combined net down 9.5k lots for the week to 624k lots, the lowest since January. The increase in bets on WTI was driven by growing demand for fuel in the United States ahead of Memorial Day weekend which kicks off the country’s summer driving season, with gasoline stocks the lowest in nearly three decades as well as crude inventory at Cushing, WTI’s delivery center, about 17% below the five-year average. Brent, the world benchmark, saw net sales due to the risk of increased Iranian production and virus outbreaks in Asia dampening demand.
WTI-led crude futures (OILUSJUL21) remain supportive as the US summer driving season begins, while Brent (OILUKAUG21) continues to struggle to break above $ 70 before another round of Iran nuclear negotiations and Tuesday’s OPEC + meeting where the group is expected to confirm an already agreed 0.8 million barrels per day increase for July. Until the market receives more clarity on the outcome of these, the upside potential beyond the March high of $ 71.40 appears limited.
The grains sector suffered another week of sharp price corrections and cuts in bullish bets. Led by soybeans, corn and, to a lesser extent, wheat, the combined long net fell 10% to a seven-month low at 412,000 lots, with the CBOT wheat position returning to almost stable again.
Gold buying continued into a fourth week with the long 20k lots net surging to a four month high at 126.9k. It should be noted that most of the change in recent weeks has been driven by a 27% reduction from the gross short position to the lowest since last July. Another sign that long term trend systems, the largest position holders in the trend system universe, continue to reduce short positions, thus providing a constant supply in the market. Especially after the price broke the downtrend from the August high and after the price recently climbed above its 200-day moving average.
Bullish HG copper bets, meanwhile, fell 35% to 33.9k lots, the smallest bet on price hikes since last July. The main culprit behind the copper reduction and recent 9% correction is China’s attempt to reduce commodity prices and hoarding in the domestic market. An attempt expected by Goldman Sachs and Citigroup will fail due to the rapid rebound in demand in advanced economies, particularly the United States.
The current rally in gold has left both platinum and silver lagging behind, and during the week both metals saw net sells, most notable being the 17% reduction in the long-to-long platinum net. a 5-1 / 2 month low at 14.6k.
Gold (XAUUSD) is heading for its biggest monthly gain since July, with inflation remaining the focus of attention, while Bitcoin is heading for its worst month since 2011. The rally in ETF holdings backed by bullion and fund positions in futures remain moderate, indicating that many investors are not convinced of the short- and medium-term direction.
However, Friday’s failed attempt to lower could indicate that constant bidding and short-term hedging of long-term trend systems is underway. Focus this week on Friday’s jobs report and whether gold can break above $ 1,923, the 61.8% retracement of the August-March correction. Key support in the $ 1845-55 area.
On forex, the flow for the week leading up to May 25 was skewed towards continued dollar selling, with the Bloomberg Dollar Index hitting a few steps from the January low before seeing a slight rally in the days that followed. the reference period. After six weeks of continued selling the greenback short against ten IMM currency futures and the dollar index hit a three-month high of $ 16.8 billion. There have been a few small sales of AUD and CAD, but overall buyers have had the upper hand, notably in euros (4.1k lots or $ 0.6 billion), pounds sterling (5 , 8k or $ 0.5 billion) and in CHF (3.1k or $ 0.3 billion).
What is the Trader Commitments Report?
COT reports are published by the US Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and diesel. They are released every Friday after the US close with data for the week ending the previous Tuesday. They break down the open interest of the futures markets into different user groups based on the asset class.
Start trading now
This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, which is part of the Saxo Bank group via RSS feeds on FX Empire