Weekly COT Report: Traders are their most bullish on USD in 2.5 years

Read our guide on how to interpret the weekly COT report

As of Tuesday 30^th November 2021:

Traders added US $2.5 billion to USD net-long exposure, taking it to $24.4 billion – its most bullish level since June 2019
Net-short exposure to British pound futures were at their most bearish in over 2-years
Bears added +16.9k short contracts last week

Dollar bulls go from strength to strength

According to data compiled by IMM (International Money Markets) traders are their most bullish on the US dollar since June 2019. The chart below shows exposure to G10 currencies and emerging market currencies in a ‘stacked’ chart, which when combined represents the total exposure. Its last peak was around +$34 billion and its record sits around $51 billion so do not yet appear to be at a sentiment extreme.

Traders are theist most bearish on GBP futures in 2.5 years

Traders increased their gross-short exposure on GBP futures to 91k contracts, which is the highest levels since October 2019. As gross longs remained effectively flat it has pushed net-short exposure to its most bearish level in 2.5 years. Historically, traders have been much more bearish than this so there are no immediate signs of a reversal, and perhaps we’ll see more extreme net-short exposure if longs begin to close out.

Bears return to the Aussie

Traders reached a record-level of net-bearish exposure in October on AUD futures, which is usually a red flag for a sentiment extreme. Needless to say, many of those bears were forced to cover as AUD prices refused to drop but we have since noted a sudden increase of gross short bets last week – where 16.9k new short contracts were initiated which has dragged net-short exposure to an 8-week low. And with a hawkish Fed and stubbornly dovish RBA we could see further selling pressure on the Australian dollar which closed below 70c on Friday.

As of Tuesday 30^th November 2021:

Bulls and bears continued to trim exposure to gold futures
Net-short exposure to platinum futures rose to a 4-week high
The closure of bullish bets on copper futures dragged net-long exposure to a 3-month low

Bullish bets on copper continued to decrease

Net-long exposure to copper futures fell for a sixth consecutive week and now sits at a 3-month low. The main driver behind this move is due to long contracts being closed, as opposed to fresh shorts being initiated. Whilst this does not make a compelling argument for a bearish case, it does explain why copper prices are struggling to rally and trade in a choppy range around $4.30. Ultimately, we maintain a bullish bias above $4.00 overall but have braced ourselves for some further sideways action over the near-term.

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

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.