Positions of large speculators according to the COT report as at 4/6/2021

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.

 

	4/6/2021	28/5/2021	21/5/2021	14/5/2021	7/5/2021	30/4/2021
USD index	3,000	2,800	2,700	2,500	2,100	2,700
EUR	109,300	104,000	99,900	93,900	84,800	81,000
GBP	24,100	30,700	24,900	28,200	19,800	29,200
AUD	-1 900	-800	3,000	2,400	1,500	-1,400
NZD	5,900	8,600	8,400	9,300	8,600	7,000
CAD	48,800	46,100	38,600	25,900	15,722	13,200
CHF	300	-1,200	-4,300	-2,900	100	-700
JPY	-47,100	-50,200	-50,900	-41,700	-41,500	-48,500

_{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
4/6/2021	3,900	5,300	1,300	-4,100	Bullish
28/5/2021	10,500	4,100	3,800	-300	Bullish
21/5/2021	30,400	6,000	9,000	3,000	Bullish

 

Total net speculator positions rose by 5,300 contracts last week. Thus, the bullish sentiment continues. This change is due to an increase in long positions of 1,300 contracts and a decrease in short positions of 4,100 contracts

The price of the euro continued to hover near the resistance band last week and weakened slightly. The ECB interest rate decision on Thursday could have a strong influence on the euro's future direction.

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
4/6/2021	5,100	-6,600	0	-6,600	Weakening bullish
28/5/2021	-3,800	5,800	1,200	-4,600	Bullish
21/5/2021	-800	-3,300	-1,900	1,400	Weakening bullish

 

Last week, the total net positions of speculators fell by 6,600 contracts. This change is the result of a decrease in short positions of 6,600 contracts

The pound continued to move near the resistance band and weakened slightly 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
4/6/2021	400	-1,100	300	1,400	Bearish
28/5/2021	-2,600	-3,800	-2,800	1,000	Bearish
21/5/2021	-3,500	600	-1,300	-1,900	Bullish

 

Last week, speculators total net positions fell by 1,100 contracts. This change is due to an increase in long positions of 300 contracts and an increase in short positions of 1,400 contracts.

The Australian dollar strengthened slightly last week in line with risk-on sentiment in equity markets. The Aussie is now in the middle of the band defined by the resistance and support zone below.

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
4/6/2021	2,000	2,700	200	2,900	Weakening bullish
28/5/2021	1,100	200	800	600	Bullish
21/5/2021	-2,300	-900	-2,800	-1,900	Weakening bullish

Last week, total net positions fell by 2,700 contracts. This change is the result of an increase in long positions by 800 and an increase in short contracts by 2,900.

The NZD corrected last week's gains from the previous week.

Resistance: 0.7370-0.7450

The nearest support: 0.6900-0.6960