Positions of large speculators according to the COT report as at 28/5/2021

Total net speculator positions in the USD index rose by 100 contracts last week. This change is the result of an increase in long positions of 350 contracts and an increase in short positions of 250 contracts.

 

The increase in speculators' total net positions occurred last week in the euro, the British pound, the New Zealand dollar, the Swiss franc and the Japanese yen.

 

Decreases in speculators' total net positions occurred in the Canadian dollar and the Australian dollar.

 

Tuesday's rate decision by the Reserve Bank of Australia will have a big impact on the Australian dollar this week. Last week the New Zealand central bank decided on rates and the rate was left unchanged at 0.25%. The New Zealand dollar strengthened significantly after that. Given that the the AUD and the NZD are closely correlated and the Reserve Bank of Australia is not expected to change rates, it is possible that the AUD will strengthen this week.

 

The important report is on Friday when the US reports key employment data, the so-called NFP report.

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.

 

	28/5/2021	21/5/2021	14/5/2021	7/5/2021	30/4/2021	23/4/2021
USD index	2,800	2,700	2,500	2,100	2,700	3,500
EUR	104,000	99,900	93,900	84,800	81,000	80,800
GBP	30,700	24,900	28,200	19,800	29,200	25,200
AUD	-800	3,000	2,400	1,500	-1,400	-1,800
NZD	8,600	8,400	9,300	8,600	7,000	4,300
CAD	44,800	46 100	38,600	25,900	15,722	13,200
CHF	-1,200	-4,300	-2,900	100	-700	-1,600
JPY	-50,200	-50,900	-41,700	-41,500	-48,500	-59,800

_{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
28/5/2021	10,500	4,100	3,800	-300	Bullish
21/5/2021	30,400	6,000	9,000	3,000	Bullish
14/5/2021	19,800	9,100	16,900	7,800	Bullish

 

Total net speculator positions rose by 4,100 contracts last week. This change is due to an increase in long positions by 3,800 contracts and a decrease in short positions by 300 contracts.

The price of the euro strengthened slightly last week and continues to hover near 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
28/5/2021	-3,800	5,800	1,200	-4,600	Bullish
21/5/2021	-800	-3,300	-1,900	1,400	Weakening bullish
14/5/2021	21,200	8,400	12,800	4,400	Bullish

 

Last week, the total net positions of speculators grew by 5,800 contracts. This change is the result of long positions increasing by 1,200 contracts, while net short positions fell by 4,600 contracts.

The pound continued to strengthen last week and is hovering near a 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
28/5/2021	-2,600	-3,800	-2,800	1,000	Bearish
21/5/2021	-3,500	600	-1,300	-1,900	Bullish
14/5/2021	3,300	900	800	-100	Bullish

 

Last week, speculators' total net positions fell by 3,800 contracts. This change is due to a decrease in long positions by 2,800 and an increase in short positions by 1,000 contracts.

The Australian dollar continued to weaken last week and the price broke the rising trend line to the downside. However this could be a false breakout if the price returns above this line again and then the price could rise further. Otherwise, the pair could continue to weaken.

Tuesday's interest rate decision by the Reserve Bank of Australia will be important and will have a major impact on the movement of the Australian dollar this week.

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
28/5/2021	1,100	200	800	600	Bullish
21/5/2021	-2,300	-900	-2,800	-1,900	Weakening bullish
14/5/2021	1,000	700	0	-700	Bullish

Last week, total net positions rose by 200 contracts. This change is the result of an increase in long positions by 800 and an increase in short contracts by 600.

The NZD strengthened strongly last week following the central bank's rate decision, which left the key rate at 0.25%.

Resistance: 0.7370-0.7450

The nearest support: 0.6900-0.6960