Positions of large speculators according to the COT report as at 27/8/2021

Total net speculator positions in the USD index rose by 1,200 contracts last week. This change is the result of an increase in long positions by 1,200 contracts.

The increase in total net speculator positions occurred in the Canadian dollar last week.

Decrease in total net positions occurred in the euro, the Australian dollar, the New Zealand dollar, the Swiss franc, the British pound and the Japanese yen.

Last week's Jackson Hole symposium saw the Fed chief mentioning that the Fed's priority is to make sure a stable labour market and to control inflation.

While economic indicators suggest that the values of both criteria are approaching target levels, Powell cited some concerns about the impact of the Delta virus variance. Powell confirmed that a tapering of government bonds could begin this year. Regarding rate hikes, the Fed did not give any specific decision on that yet. Thus, the Fed will not rush to raise the interest rates for the time being. The result of this relatively dovish speech was a weakening of the US dollar against all major currencies and a strengthening of gold and US equities.

This risk on sentiment could continue into Friday's US jobs report. Last month's NFP report significantly beat expectations and sparked a strong rise in the US Dollar. If the employment data for August, which are to be presented on Sep 3, 2021, significantly exceeds expectations again and the unemployment rate falls below 5%, the Fed will have further arguments to debate on interest rate hikes, which might trigger a strengthening of the US Dollar.
 

According to the COT report, large speculators believe in a strengthening US dollar. One has to take into account the fact that the COT data that are presented on Friday is pointing to the situation on Tuesday, therefore before the Jackson Hole speech.

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.

	27/8/2021	20/8/2021	13/8/2021	6/8/2021	30/7/2021	23/7/2021
USD index	20,400	19,200	19 300	18,900	16,500	12,200
EUR	24,600	57,600	33 900	38,000	38,100	45,800
GBP	-16,700	4,700	7 100	-100	-5,700	-3,500
AUD	-56,600	-50,400	-49 300	-41,300	-39,300	-35,700
NZD	-400	-200	-1 000	-300	1,400	3,000
CAD	5,900	2,700	6 500	7,500	5,400	12,900
CHF	4,100	5,500	9 700	7,500	8,500	8,000
JPY	-66,700	-63,200	-60,700	-55,200	-59,900	-55,700

_{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
27/8/2021	3,800	-33,000	-39,400	-6,400	Weakening bullish
20/8/2021	-7,300	23,700	20,700	-3,000	Bullish
13/8/2021	27,600	-4,100	13,800	17,900	Weakening bullish

 

Total net speculator positions fell by 33,000 contracts last week. This change is due to a decrease in long positions by 39,400 contracts and a decrease in short positions by 6,400 contracts.

The price of the euro appreciated last week. This was mainly due to the weakening of the dollar after the Fed comments.

Long-term resistance: 1.1870 - 1.1900

Long-term support: 1.1580 - 1.1620
 

We can take the level 1.17 as a support too as this is the level where the price bounced upwards last week.

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
27/8/2021	18,000	-21,400	-2,400	19,000	Bearish
20/8/2021	-500	-2,400	-2,800	-400	Weakening bullish
13/8/2021	2,000	7,200	1,600	-5,600	Bullish

 

Last week, the total net positions of speculators fell by 21,400 contracts. The change in total net positions over the past week is the result of a decrease in long positions by 2,400 and an increase in short positions by 19,000 contracts.

The pound strengthened against the US dollar last week as it bounced off support levels. The rise was supported by the Fed's statement.

Long-term resistance: 1.3900-1.3980

Long-term support: 1.3370-1.3620
 

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
27.8.2021	10,700	-6,200	3,200	3,000	Bearish
20/8/2021	15,200	-1,100	6,800	7,900	Bearish
13/8/2021	1,900	-8,000	-400	7,600	Bearish

 

The increase in bearish sentiment on the Australian dollar continued last week with speculators' overall net positions falling by 6,200 contracts. This change is due to a decrease in long positions of 3,200 and an increase in short positions of 3,000 contracts.

The lockdown in Australia continues to have a negative effect on the Australian dollar. However, the risk on sentiment supported by the Fed statement is a boost that might also support sentiment on the Australian Dollar.

Long-term resistance: 0.7360-0.7400

Další dlouhodobý support: 0.6980-0.7020
 

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
27/8/2021	2,200	-200	500	700	Bearish
20/8/2021	-2,500	800	-600	-1,400	Weakening bearish
13/8/2021	3,900	-700	300	1000	Bearish

Last week, total net positions fell by 200 contracts, the result of a 500 contract increase in long positions and a 700 contract increase in short positions.

The New Zealand dollar bounced off a support band last week and strengthened significantly.

Resistance: 0.7030-0.7080

Long term support: 0.6760-0.6800