Positions of large speculators according to the COT report as at 21/5/2021

The total net positions of speculators in the USD index grew by 200 contracts last week. This change is the result of a decrease in short positions by 200 contracts.

 

The total net positions of speculators rose last week in the euro, the Australian dollar and the Canadian dollar.

 

The decline in the total net positions of speculators occurred in the British pound, the Japanese yen, the New Zealand dollar and the Swiss franc.

 

Stock markets continue to rise, although consolidation took place last week, probably due to concerns about rising inflation. The growth of stock markets is a positive signal especially for commodity currencies. In the event of a decline in US stock markets, the Australian dollar and the New Zealand dollar, which are currently strongly correlated with the SP 500 index, could fall as well.

 

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.

 

	21/5/2021	14/5/2021	7/5/2021	30/4/2021	23/4/2021	16/4/2021
USD index	2,700	2,500	2,100	2,700	3,500	6,000
EUR	99,900	93,900	84,800	81,000	80,800	66,900
GBP	24 900	28,200	19,800	29,200	25,200	25,600
AUD	3 000	2,400	1,500	-1,400	-1,800	3,800
NZD	8 400	9,300	8,600	7,000	4,300	2,500
CAD	46 100	38,600	25,900	15,722	13,200	2,400
CHF	-4,300	-2,900	100	-700	-1,600	800
JPY	-50 900	-41,700	-41,500	-48,500	-59,800	-58,300

_{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
21/5/2021	30,400	6,000	9,000	3,000	Bullish
14/5/2021	19,800	9,100	16,900	7,800	Bullish
7/5/2021	5,300	3,800	6,000	2,200	Bullish

 

The total net positions of speculators grew by 6,000 contracts last week. This change is due to an increase in long positions by 9,000 contracts and an increase in short positions by 3,000 contracts.

The price of the euro strengthened slightly last week and tested the resistance band.

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
21/5/2021	-800	-3,300	-1,900	1,400	Weakening bullish
14/5/2021	21,200	8,400	12,800	4,400	Bullish
7/5/2021	-8,500	-9,400	-7,700	1700	Weakening bullish

 

Last week, the total net positions of speculators fell by 3,300 contracts. This change is the result of a decrease in long positions by 1,900 contracts, while net short positions increased by 1,400 contracts.

The pound continued to strengthen last week and tested the resistance band.

 

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
21/5/2021	-3,500	600	-1,300	-1,900	Bullish
14/5/2021	3,300	900	800	-100	Bullish
7/5/2021	-3,100	2,900	-1,400	-4,200	Bullish

 

Last week, the total net positions of speculators grew by 600 contracts. This change is due to a decrease in long positions by 1,300 and a decrease in short positions by 1,900 contracts.

The Australian dollar continued to weaken last week and the price reached a rising trend line. If it breaks down, the pair might continue to weaken.

Long-term resistance: 0.7870-0.8000

 

Long-term support: 0.7530-0.7600
 

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
21/5/2021	-2,300	-900	-2,800	-1,900	Weakening bullish
14/5/2021	1,000	700	0	-700	Bullish
7/5/2021	400	1,600	500	-1,100	Bullish

Last week, total net positions fell by 900 contracts. This change is the result of a decrease in long positions by 2,800 and a decrease in a number of short contracts by 1900.

Because this pair is correlated with the AUDUSD, the NZDUSD also continued to weaken last week.

Resistance: 0.7370-0.7450

The nearest support: 0.6900-0.6960