Weekly COT Report: Bulls Have All but Abandoned the Swiss Franc

Read our guide on how to interpret the weekly COT report

As of Tuesday 26^th October 2021:

Net-long exposure to the US dollar was trimmed for a third week, according to data compiled by IMM (International Money Market). Traders are estimated to be net-long USD by $19.75 billion, down -$1.7 billion on the week, $19.4 billion of which is against G10 currencies and just $0.3 billion of net-long exposure against emerging currencies.
Traders flipped to net-long exposure on Canadian dollar futures, breaking an 8-week streak of bearish net exposure
Bears continued to increase net exposure to CHF and JPY futures
Short-covering saw net-long exposure to GBP futures rise to a 3-month high
Net-short exposure to AUD futures were trimmed by just -12 contracts, which is really not a lot considering the Australian dollar rose to a 16-week high and net-exposure is just off from record highs.

CAD futures flip to net-long exposure

Traders flipped to net-long exposure to CAD futures for the first week in eight. It may only be by 3.3k contracts, but the move was seen with a rise of 5.6k new longs and reduction of -8.6k shorts, which pushed net exposure u by 14.2k contracts to the favour of the bull camp. Given CAD spent around 3-month correcting against its dominant bullish trend, prices do not appear to be stretched to the upside and momentum has now realigned with that bullish trend. So the flip to net-long is simply confirming the trend.

Is the Swiss franc reaching a sentiment extreme?

Traders are their most bearish on Swiss franc futures since December 2019. The net exposure indicator has fallen for 10 of the past 11 weeks and gross longs are near a record low. Yet the futures prices rose to an 11-week high. At some point we will either see shorts covered to send prices higher, or prices need to turn lower to justify the current rate of bearish exposure.

We suspect the former will take place (sentiment extreme to push prices higher) given just 5.7% of traders hold gross long positions, the 1-year Z-score is at -3 standard deviations. But, as always, we need price action to confirm.

As of Tuesday 26^th October 2021:

Traders increased net-long exposure to gold futures for a fourth week, and are now their most bullish
Large speculators were their most bullish on silver futures in 14-weeks.
Traders slightly increased net-long exposure to platinum futures to a 15-week high.

Can silver outperform gold?

It is certainly a scenario to consider, given the rise of bullish interest on silver futures. Traders are now their most bullish on silver in 14-weeks, although as of yet its rally has been a function of short-covering. Therefore, we now want to see fresh longs initiated to provide the rally with some additional strength. However, both gold and silver are retracing against their trends so one way to monitor the relationship is to see which has the shallowest correction to reveal the stronger market for when or if bulls return.

How to trade with City Index

You can trade 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

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.