Positions of large speculators according to the COT report as at 7/6/2022

Total net speculator positions on the USD index rose by 400 contracts last week to 37,938 contracts. This change is the result of a 600-contract increase in long positions and a 200-contract increase in short positions.
On the euro, there was a decrease in total net positions after a significant previous increase. A reduction in total net positions also occurred on the New Zealand dollar last week.
Increases in total net positions occurred last week on the British pound, the Australian dollar, the Japanese yen, the Canadian dollar, and the Swiss franc.
The markets experienced high volatility last week, triggered by concerns that the economy was tightening more rapidly on the back of rising inflation. As a result, equity indices have continued to fall and this risk-off sentiment has led to a strengthening of the US dollar and a weakening of more or less all currencies tracked.

The positions of speculators in individual currencies

The total net positions of large speculators are shown in Table 1: If the value is positive then the large speculators are net long. If the value is negative, the large speculators are net short.

 

Note: The explanation of COT methodolody is at the the end of the report.
 

Notes:

• Large speculators are traders who trade large volumes of futures contracts, which, if the set limits are met, must be reported to the Commodity Futures Trading Commission. Typically, this includes traders such as funds or large banks. These traders mostly focus on trading long-term trends and their goal is to make money on speculation with the instrument.
• ​The total net positions of large speculators are the difference between the number of long contracts and the number of short contracts of large speculators. Positive value shows that large speculators are net long. Negative value shows that large speculators are net short. The data is published every Friday and is delayed because it shows the status on Tuesday of the week.
• The total net positions of large speculators show the sentiment this group has in the market. A positive value of the total net positions of speculators indicates bullish sentiment, a negative value of total net positions indicates bearish sentiment.
• When interpreting charts and values, it is important to follow the overall trend of total net positions. The turning points are also very important, i.e. the moments when the total net positions go from a positive value to a negative one and vice versa. Important are also extreme values ​​of total net positions as they often serve as signals of a trend reversal.
• Sentiment according to the reported positions of large players in futures markets is not immediately reflected in the movement of currency pairs. Therefore, information on sentiment is more likely to be used by traders who take longer trades and are willing to hold their positions for several weeks or even months.

 

Detailed analysis of selected currencies

 

Explanations:
 

• Purple line and histogram: this is information on the total net position of large speculators. This information shows the strength and sentiment of an ongoing trend. It is the indicator r_COT Large Speculators (by Kramsken) in
• Information on the positions of so-called hedgers is not shown in the chart, due to the fact that their main goal is not speculation, but hedging. Therefore, this group usually takes the opposite positions than the large speculators. For this reason, the positions of hedgers are inversely correlated with the movement of the price of the underlying asset. However, this inverse correlation shows the ongoing trend less clearly than the position of large speculators.​
• We show moving average SMA 100 (blue line) and EMA 50 (orange line) on daily charts.

​Charts are made with the use of  The source of numerical data is

 

The Euro

   

✕

Figure 1: The euro and COT positions of large speculators on a weekly chart and the EUR/USD on D1

The total net positions of speculators reached 50 543 contracts last week, down by 1 729 contracts compared to the previous week. This change is due to a decrease in long positions by 6,305 contracts and a decrease in short positions by 4,576 contracts. This data suggests weak bullish sentiment as total net positions are positive but at the same time there has been a decline.
Open interest rose by 24,350 contracts in the last week. This shows that the downward movement that occurred in the euro last week was supported by volume and it was therefore a strong price action.
The price bounced off resistance at the EMA 50 moving average and is approaching horizontal support which is in the band at 1.0400. The weakening euro is a result of the ECB's approach to inflation. The ECB announced to raise the rate by 0.25% from July, which is significantly less than the interest rate increase implemented by the US Fed. 
Long-term resistance: 1.0620 – 1.0650. The next resistance is at 1.0770-1.0780.
Support: 1.0340 – 1.0420

The British pound

 

✕

Figure 2: The GBP and COT positions of large speculators on a weekly chart and the GBP/USD on D1

The total net positions of speculators last week reached - 70,810 contracts, having increased by 3,295 contracts compared to the previous week. This change is due to the growth in long positions by 3,830 contracts and the growth in short positions by 535 contracts. This suggests weak bearish sentiment as the total net positions of large speculators are negative, but at the same time there has been an increase in them.
Open interest rose by 5742 contracts last week, indicating that the downward movement in the pound that occurred last week was supported by volume and it was therefore a strong price action.
The pound is weakening strongly in the current risk off sentiment and has reached its long term support.
Long-term resistance: 1.2440 – 1.2476.    Support: 1.2160 – 1.2200
 

The Australian dollar

   

✕

Figure 3: The AUD and COT positions of large speculators on a weekly chart and the AUD/USD on D1

The total net positions of speculators reached 47,896 contracts last week, up by 786 contracts compared to the previous week. This change is due to a decrease in long positions by 1,177 contracts and a decrease in short positions by 1,963 contracts. This data suggests weak bearish sentiment on the Australian dollar, as the total net positions of large speculators are negative, but at the same time there was an increase in them in the previous week.
There was an increase in open interest of 12,761 contracts last week. This means that the downward movement that occurred last week on the AUD was supported by volume and it was therefore a strong price action. The Australian dollar is weakening sharply even though the Reserve Bank of Australia raised interest rates by 0.50% last week. The reason for this bearish decline is the current risk-off sentiment which is particularly threatening commodity currencies, which includes the Australian dollar.
Long-term resistance: 0.7250-0.7260                                                                                                              Long-term support: 0.6830-0.6850  (the support zone begins at 0.6930 according to a weekly chart).
 

The New Zealand dollar

   

✕

Figure 4: The NZD and the position of large speculators on a weekly chart and the NZD/USD on D1

The total net positions of speculators last week amounted to -19,771 contracts, down by 1,047 contracts compared to the previous week. This change is due to an increase in long positions by 3,131 contracts and an increase in short positions by 4,178 contracts. This data suggests that there has been bearish sentiment on the New Zealand Dollar over the past week as the total net positions of large speculators have been negative and there was further decline in them as well.
Open interest rose by 8,406 contracts last week. The downward move in NZD/USD that occurred last week was supported by volume and therefore the move was strong.
The NZD/USD bounced off the resistance band at 0.6570 and approached significant support. The decline in the New Zealand Dollar is mainly due to risk off sentiment in equity markets.
Long-term resistance: 0.6540 – 0.6570
Long-term support: 0.6220 – 0.6280
 

Explanation to the COT report

• The COT report shows the positions of major participants in the futures markets. Futures contracts are derivatives and are essentially agreements between two parties to exchange an underlying asset for a predetermined price on a predetermined date. They are standardised, specifying the quality and quantity of the underlying asset. They are traded on an exchange so that the total volume of these contracts traded is known.

 

• Open interest: open interest is the sum of all open futures contracts (i.e. the sum of short and long contracts) that exist on a given asset. OI increases when a new futures contract is created by pairing a buyer with a seller. The OI decreases when an existing futures contract expires at a given expiry time or by settlement.
• Low or no open interest means that there is no interest in the market. High open interest indicates high activity and traders pay attention to this market. A rising open interest indicates that there is demand for the currency. That is, a rising OI indicates a strong current trend. Conversely, a weakening open interest indicates that the current trend is not strong.

 

• Large speculators are traders who trade large volumes of futures contracts, which, if the set limits are met, must be reported to the Commodity Futures Trading Commission. Typically, this includes traders such as funds or large banks. These traders mostly focus on trading long-term trends and their goal is to make money on speculation with the instrument. Traders should try to trade in the direction of these large speculators.
• The total net positions of large speculators are the difference between the number of long contracts and the number of short contracts of large speculators. Positive value shows that large speculators are net long. Negative value shows that large speculators are net short. The data is published every Friday and is delayed because it shows the status on Tuesday of the week.
• The total net positions of large speculators show the sentiment this group has in the market. A positive value of the total net positions of speculators indicates bullish sentiment, a negative value of total net positions indicates bearish sentiment.
• When interpreting charts and values, it is important to follow the overall trend of total net positions. The turning points are also very important, i.e. the moments when the total net positions go from a positive value to a negative one and vice versa. Important are also extreme values ​​of total net positions as they often serve as signals of a trend reversal.
• The COT data are usually reported every Friday and they show the status on Tuesday of the week.
• Sentiment according to the reported positions of large players in futures markets is not immediately reflected in the movement of currency pairs. Therefore, information on sentiment is more likely to be used by traders who take longer trades and are willing to hold their positions for several weeks or even months.