Saxo Bank publishes weekly Commitment of Traders Reports (COT), which cover leveraged fund positions in commodities, bonds and equity index futures. For IMM currency futures and the VIX, we use the broader metric called non-commercial.
This summary highlights futures positions and changes made by hedge funds in the commodities, forex and financial sectors through the last Tuesday, November 2nd decision. The dollar rose while bond yields fell on a cautious statement from the Australian central bank. The decline in 10-year bond yields was driven by a sharp shift between falling inflation expectations (breakeven) and rising real yields.
The Bloomberg Commodity Index fell 1.4% as sales in the energy and metals sectors were only partially offset by gains in grains and some soft commodities.
Hedge funds became sellers of all energy contracts as well as gold, silver and copper in the last reporting week on November 2nd. The nervousness ahead of the OPEC + and FOMC meetings as well as growth concerns in China all contributed to the long liquidation. In contrast, the agricultural sector posted a second week of net buying, led by the grain sector. Overall, the net long position across the 24 major contracts tracked remained constant at just over 2 million lots.
In the energy sector, net sales of WTI and Brent were extended to a fourth week, with the combined net long reduced by 27,000 lots to a two-month low of 573,000 lots. Brent longs were already trimmed before the price fell 4 cents below the 2018 high on October 26, and long liquidation has increased since then. It’s worth noting that the impact of last Wednesday’s slump was not c -tured in this week’s data. With profit-taking on all fuel products as well, the 50,000-lot reduction was the largest sector reduction since August.
The gold long positions saw a small decrease of 2.3k lots after increasing 32k lots in the previous week, while the price decrease in silver by 2.4% helped an 18% reduction in the net long position by an Trigger a combination of long liquidation and new short sales. For gold, given last Tuesday’s cut-off date, the drop to $ 1759 on Wednesday and the subsequent rise to $ 1818 on Friday, the highest weekly close since early September, was not reflected in this report. Copper’s net long position was lowered to 35.4k lots for a second week, returning to levels held before the most recent roller coaster ride of $ 4.35 to $ 4.75 and back.
Another week of strong gains for the grain sector helped broadly support the buy of all six contracts. The 129,000 lot surge, the largest weekly increase since September 2020, has increased the net long by a third, led by corn and soybeans. Chicago wheat net fell to long for the fifth time this year. Commodities were mixed with buyers returning to sugar after almost uninterrupted net sales since August. The cocoa long was cut by 77%, while a renewed increase in cotton, this time by 6.5%, only led to a slight increase in the net long of 2%.
Latest comments from our Market Quick Take posted daily here:
Crude oil trades higher today, extending Friday’s rally as the market weighs President Biden’s limited ability to lower crude oil and gasoline prices. The reasons for OPEC’s lack of interest in curbing the month-long rally were made clear by the Saudi oil minister after arguing that the current energy crisis was caused by decades of anti-oil policies that resulted in underinvestment. t the job of the producers to fix it.
This week, focus on the monthly oil market reports from EIA and OPEC (IEA next week) as well as comments from the US administration and not least on whether Europe will experience increased gas flows, as Putin promised. So far, things don’t look promising as Dutch TTF are up 8% with no signs of increased flows on the important Mallnow line through Poland to Germany. A failure could support gas and oil by increasing the need to switch.
Gold (XAUUSD) hit a two-month high in Asia at $ 1,821.6 while silver (XAGUSD) broke the downtrend, possibly creating another challenge at $ 25. The extensions follow a strong weekend rally, despite the stronger dollar, fueled by the reluctant messages from the FOMC and Bank of England and a strong US labor report suggesting increased wage pressures. US 10-year real yields are trading lower with the focus now on Wednesday on US CPI and whether gold can find enough momentum to challenge key resistance at $ 1835.
The entire dollar long position against ten IMM currency futures and the dollar index was reduced for the third week in a row. However, the slight decrease of 2% to $ 22.6 billion highlighted a week of relatively subdued cash flows, with the only notable change being some purchases of EUR (+5.1,000 lots) and NZD (5,000). Overall, nominal exposure on both the long and short sides was reduced as traders reduced their positions and exposure ahead of Wednesday’s FOMC meeting.
In terms of expanded short positions compared to recent history, the near two-year high was CHF (-20.6k), the almost three-year high was JPY (-108k) and MXN, where the net short Positions last reached a level most notably seen in early 2017.
What is the Dealer Obligations Report?
The COT reports are issued by the US Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the US shutdown with data from the week that ended the previous Tuesday. They divide the open interest in futures markets into different user groups depending on the asset class.
- raw materials: Manufacturer / dealer / processor / user, barter dealer, Managed Money and other
- Finances: Dealers / intermediaries; Asset managers / institutional; Leveraged funds and other
- Forex: A rough breakdown between commercial and noncommercial (Speculators)
The reasons why we mainly focus on the behavior of the highlighted groups are:
- You probably have tight stops and no underlying exposure that is secured
- She does that most reactive to change in the case of fundamental or technical price developments
- It offers views over Main trends but also helps to decipher when a reversal threatens
Start trading now
This article is provided by Saxo C -ital Markets (Australia) Pty. Ltd, Part of Saxo Bank Group via RSS feeds on FX Empire