USD, EUR/USD, USD/CAD, Crude Oil, Dow Jones Analysis: COT report

View the latest commitment of traders reports

Market positioning from the COT report - as of Tuesday June 11, 2024:

Large speculators increased short exposure to EUR/USD futures by 19% (22.9k contracts) and trimmed longs by 0.7% (-53 contracts)
Large speculators reached a record level of net-short exposure to CAD futures to strongly suggest a sentiment extreme could be near
Net-long exposure to GBP/USD increased for a third week, to their most bullish level in three months
They also increased net-long exposure to NZD/USD futures to their most bullish level since November 2021
Managed funds reduced gross-short exposure to WTI crude oil -31% (-38k contracts) last week
Net-long exposure to silver and copper was lower among large speculators, gold was flat
Managed funds increased their gross-short exposure to Dow Jones E-mini futures at their fastest weekly pace on record

US dollar positioning (IMM data) – COT report:

The swing low for the USD index that I hinted at last week is coming along nicely. Traders are shorting EUR/USD and aggregate positioning towards USD inflows across all futures contracts increased, according to IMM (International Money Market). However, Asset managers trimmed net-long exposure to the USD index, whereas large speculators exposure remained flat. IN either case, both remain clearly net-long. And with EUR/USD falling due to political turmoil in France, it suggests further upside potential for the USD index – seeing as the euro accounts for around 57% of its basket weighting.

EUR/USD (Euro dollar futures) positioning – COT report:

News of the snap election in France tempted euro bulls from the sidelines. Large speculators increased gross-short exposure by 19% (22.9kcontracts), although they only trimmed longs by a mere -54 contracts (-0.7%). Still, it has dragged net-long exposure to a 4-week low, and not from a particularly bullish level to begin with. Asset managers remain heavily net long, although they also increased short exposure last week. And looking at price action since data was compiled last Tuesday, short interest has likely increased and could threaten the net-long exposure status of EUR/USD futures.

CAD/USD (Canadian dollar futures) positioning – COT report:

Large speculators increased their net-short exposure to Canadian dollar futures to a record high last week. Open interest for all futures contracts hit its second highest level on record. Yet prices remain above a key level of long-term support. And if prices fail to break lower whilst exposure remains at extremely bearish levels, we have to assume that bears will at some point be forced to cover and trigger a rally for CAD (which could be USD/CAD bearish). However, whilst COT data can help highlight the underlying strength of trends or their potential to reverse, they’re not the best timing tool. But for now, I suspect some bears will become nervous in the weeks ahead unless we see CAD pairs weaken from already weak levels.

Gold, silver, copper futures positioning – COT report:

Bullish sentiment towards key metals futures markets seems to have cooled, with net-long exposure retreating lower for silver and copper and remaining effectively flat for gold. All of these metals have seen extended moves to the upside recently, so even a slight correction would not come as a huge surprise. And with the Fed finally pushing back on three cuts this year, it adds another reason to be cautious at what appears to be part of a corrective move lower for these metals.

Dow Jones Industrial futures (DJ) positioning – COT report:

Long-long exposure to Dow Jones E-mini futures fell at their fastest weekly pace since October last week. Manage funds increased shorts at their fastest weekly pace on record. We have long highlighted that the Dow has been the short vehicle of choice over the S&P 500 and Nasdaq during bad times, and this does nothing to shatter that assumption. Managed funds and large specs are on the cusp of flipping to net-short exposure, so we could well find that they have made that transition by the next report.

How to trade with City Index

You can easily trade with City Index by using these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.