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Speculators focus on the energy crisis and dollar strength

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 commodities, forex and financials through last Tuesday, September 28th, energy crisis and rising government bond yields due to heightened Fed taper expectations.

raw materials

The Bloomberg Commodity Index, which excludes rising gas prices in the EU and Asia, as well as coal and carbon emissions, rose 5.4% in the week ended September 28, with gains in most sectors , led by energy and raw materials. Overall, speculators were net buyers of 16 of the top 24 commodity futures tracked in this update, supporting a 6% increase in total net exposure of 1.99 million lots.

The global energy crisis took center stage, with natural gas gaining 21% for the week, while crude oil rose nearly 7% in anticipation of increasing demand from consumers switching to diesel, propane and gas oil made from criminally expensive gas and coal. Interestingly, the rise in natural gas prices resulted in only a modest 2% increase in net long, with the increase being mainly driven by short coverings.

The biggest exception was gold, where bullish bets were cut by a third as government bond yields skyrocketed and the dollar rose. vbuyers returned just before prices slumped again last Wednesday.

Buyers returned to the grain sector for the first time in six weeks, with soybeans and corn seeing renewed demand. Cotton’s 11% surge to a ten-year high helped drive the net long position to its highest level since May 2018, while coffee’s return to $ 2 / pound attracted new long and short cover.


Persistent dollar strength in response to the risk crisis, driven by falling stocks, debt concerns in China’s real estate sector, higher yields and Fed tapering expectations, helped the greenback long position rise 14% from 10% IMM currency futures and the dollar index rose to a new 19-month high at $ 17.8 billion. The reporting week didn’t include last Wednesday’s breakout when the euro fell to its weakest level since July 2020 while the broad Bloomberg Dollar Index hit an 11-month high.

The biggest loss was the euro, where 11.2 thousand sales made the net neutral again. The two largest short positions in the yen and AUD were further expanded, with the latter hitting a record high of 86.4,000 lots. The purchase of GBP, NZD and, last but not least, CAD helped reduce the overall impact by the equivalent of $ 1 billion.

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: producer / trader / processor / user, barterer, Managed Money and other
Finance: Dealer / Broker; 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

Ole Hansen, Head of Commodities Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, Part of Saxo Bank Group via RSS feeds on FX Empire

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