Positions of large speculators according to the COT report as at 13/8/2021

Total net speculator positions in the USD index rose by 400 contracts last week. This change is the result of a 2,500 contract increase in long positions and a 2,100 contract increase in short positions.

The increase in total net speculator positions occurred last week in the British pound and the Swiss franc.

The decrease in total net positions occurred in the euro, the Australian dollar, the New Zealand dollar, the Canadian dollar, and the Japanese yen.

The Reserve Bank of New Zealand will decide on interest rates on Wednesday this week. Analysts expect a rate hike from 0.25% to 0.50%. If the rate hike is accompanied by an optimistic outlook on the economy and the bank indicates further rate hikes, then the NZD is likely to appreciate. However, if the rate hike is accompanied by concerns about the further spread of the Delta variant of the coronavirus that has put Australia in lockdown, the NZD could weaken even if rates are raised.

The positions of speculators in individual currencies

The total net positions of large speculators are shown in Table 1: If the value is positive then the large speculators are net long. If the value is negative, the large speculators are net short.

 

	13/8/2021	6/8/2021	30/7/2021	23/7/2021	16/7/2021	9/7/2021
USD index	19,300	18,900	16,500	12,200	11,300	7,600
EUR	33,900	38,000	38,100	45,800	59,700	77,200
GBP	7,100	-100	-5,700	-3,500	8,000	21,900
AUD	-49,300	-41,300	-39,300	-35,700	-28,800	-24,900
NZD	-1,000	-300	1,400	3,000	3,200	1,800
CAD	6,500	7,500	5,400	12,900	26,400	41,200
CHF	9,700	7,500	8,500	8,000	7,100	10,200
JPY	-60,700	-55,200	-59,900	-55,700	-56,300	-69,100

_{Table 1: Total net positions of large speculators}

 

Notes:

Large speculators are traders who trade large volumes of futures contracts, which, if the set limits are met, must be reported to the Commodity Futures Trading Commission. Typically, this includes traders such as funds or large banks. These traders mostly focus on trading long-term trends and their goal is to make money on speculation with the instrument.

The total net positions of large speculators are the difference between the number of long contracts and the number of short contracts of large speculators. Positive value shows that large speculators are net long. Negative value shows that large speculators are net short. The data is published every Friday and is delayed because it shows the status on Tuesday of the week.

The total net positions of large speculators show the sentiment this group has in the market. A positive value of the total net positions of speculators indicates bullish sentiment, a negative value of total net positions indicates bearish sentiment.

When interpreting charts and values, it is important to follow the overall trend of total net positions. The turning points are also very important, i.e. the moments when the total net positions go from a positive value to a negative one and vice versa. Important are also extreme values of total net positions as they often serve as signals of a trend reversal.

Sentiment according to the reported positions of large players in futures markets is not immediately reflected in the movement of currency pairs. Therefore, information on sentiment is more likely to be used by traders who take longer trades and are willing to hold their positions for several weeks or even months.

Detailed analysis of selected currencies

Explanations:
 

Purple line and histogram in the chart window: this is information on the total net position of large speculators. This information shows the strength and sentiment of an ongoing trend.

Green line in the indicator window: these are the bullish positions of large speculators.

Red line in the indicator window: indicates the bearish positions of large speculators.

If there is a green line above the red line in the indicator window, then it means that the overall net positions are positive, i.e. that bullish sentiment prevails. If, on the other hand, the green line is below the red line, then bearish sentiment prevails and the overall net positions of the big speculators are negative.

Information on the positions of so-called hedgers is not shown in the chart, due to the fact that their main goal is not speculation, but hedging. Therefore, this group usually takes the opposite positions than the large speculators. For this reason, the positions of hedgers are inversely correlated with the movement of the price of the underlying asset. However, this inverse correlation shows the ongoing trend less clearly than the position of large speculators.

Charts are made with the use of www.tradingview.com.
 

Euro

Date	Weekly change in open interest	Weekly change in total net positions of speculators	Weekly change in total long positions of speculators	Weekly change in total short positions of speculators	Sentiment
13/8/2021	27,600	-4,100	13,800	17,900	Weakening bullish
6/8/2021	-3,500	-100	-3,200	-3,100	Weakening bullish
30/7/2021	-5,100	-7,700	-6,400	1,300	Weakening bullish

 

Total net speculator positions fell by 4,100 contracts last week. This change is due to an increase in long positions by 13,800 contracts and a decrease in short positions by 17,900 contracts.

The price of the euro strengthened slightly last week, especially in the Friday session. There was no fundamental reason for this move, so it was more of a temporary correction of the current bearish trend.

Long-term resistance: 1.2240 - 1.2350

Long-term support: 1.1700 - 1.1750
 

The British pound

Date	Weekly change in open interest	Weekly change in total net positions of speculators	Weekly change in total long positions of speculators	Weekly change in total short positions of speculators	Sentiment
13/8/2021	2,000	7,200	1,600	-5,600	Bullish
6/8/2021	-4,500	4,600	1,900	-3,700	Bearish
30/7/2021	-3,400	-2,200	-3,000	-800	Bearish

 

In the past week, total net speculator positions increased by 7,200 contracts and they are back in a bullish range as total net speculator positions are positive at 7,100 contracts. The change in total net positions over the past week is the result of a 1,600 contract increase in long positions and a 5,600 contract decrease in short positions.

The pound opened and closed at about the same price against the US dollar last week.

 

Long-term resistance: 1.42-1.4350

 

Long-term support: 1.3670-1.3700
 

The Australian dollar

Date	Weekly change in open interest	Weekly change in total net positions of speculators	Weekly change in total long positions of speculators	Weekly change in total short positions of speculators	Sentiment
13/8/2021	1,900	-8,000	-400	7,600	Bearish
6/8/2021	2,000	-2,000	300	2,300	Bearish
30/7/2021	4,300	-3,600	400	4,000	Bearish

 

The increase in bearish sentiment in the Australian dollar continued last week with speculators' overall net positions falling by 8,000 contracts. This change is due to a decrease in long positions of 400 contracts and an increase in short positions of 7,600 contracts.

The Australian dollar is falling because of new restrictive measures to prevent the spread of the Delta variant of the coronavirus and the lockdown of this country. Weak economic data from China supports the AUD’s weakness.

Long-term resistance: 0.7550-0.7600

 

Next long-term support:0.7000-0.7050  

The New Zealand dollar

 

Date	Weekly change in open interest	Weekly change in total net positions of speculators	Weekly change in total long positions of speculators	Weekly change in total short positions of speculators	Sentiment
13/8/2021	3,900	-700	300	1000	Bearish
6/8/2021	-1,200	-1,700	-2,500	-800	Bearish
30/7/2021	400	-1,600	-1,200	400	Weakening bullish

Last week, total net positions fell by 700 contracts, which is the result of a 300-contract increase in long positions and a 1,000-contract increase in short positions.

The Central Bank of New Zealand will decide on interest rates on Wednesday morning. The central bank is expected to raise the rate from 0.25% to 0.50%. This is already priced in the NZD.

If the central bank indicates that further rate hikes will continue given the good local economy, then the NZD could appreciate. If the central bank accompanies the rate hike with cautious commentary accentuating concerns about the spread of the Delta version of the coronavirus, then the NZD could weaken even if there is a rate hike. If rates are not raised, the NZD will weaken very dramatically.

Resistance: 0.7370-0.7450

Long term support: 0.6760-0.6800