Market News & Analysis
Weekly COT Report: Sterling Traders Flip To Net-Long
Matt Simpson January 6, 2020 9:59 AM
Read our guide on how to interpret the weekly COT report
As of Tuesday 24th December 2019:
- Large speculators reduced net-long exposure to USD by -$3.6 billion and currently stand net-long by $14.5 billion.
- GBP traders flipped to net-long exposure for the first time since April
- NZD traders were their least bearish in nine months
- The divergence between CAD futures pricing and positioning continued to widen
USD: Large speculators cannot seem to find the momentum to be net-long USD by over$20 billion. Net-long exposure has essentially oscillated between $10-$20 billion since July, although looking at price action its possible it could dip beneath $10 over the coming weeks.
GBP: Sterling traders flipped to net-long exposure for the first time in nine months. Although perhaps worth pointing out it lasted net-long for just one week on that occasion. That said, the difference this time around is there’s a clear rise in gross shorts and closure of net shorts over recent weeks, which is much more conducive of a stronger move. Yet on the flip side, a weaker USD has helped, and the UK is about to return to the negotiating table with Eurozone members, meaning GBP will remain a politically driven currency so traders would be wise to remain nimble.
CAD: There’s a clear divergence between market prices and positioning. Whilst futures prices have risen to their highest level since Q4 2018, market positioning is barely net-long. They’ll converge at some point, but we’ll need to see if speculators are about to be caught on the wrong side of the move and fuel a more bullish rally (although higher oil prices from Middle East tensions could perhaps help there). Yet domestically, data remains weaker and it appears harder for BOC to justify rates at 1.75. So, get your popcorn out as we could be building up for a larger move, one way or other for CAD prices.
As of Tuesday 24th December 2019:
- Net-long exposure on WTI is its most bullish since September 2018
- Bullish exposure on platinum hit a fresh record high
- Copper traders were their most bullish in nine months
- Gold positioning was again little changed (but this is clearly out of date given the bullish moves unfold this past week)
WTI: Net-log exposure on WTI is its most bullish since September 2018. And that was before tensions flared in the Middle East. It’s worth noting that gross longs have risen whilst gross shorts have been culled, which is what we require for a healthy breakout. Add into the mix the US attacking pro-Iranian personnel and we have the recipe for a breakout. Interesting, it is rising oil prices which has been lacking from the bearish case for a recession. Time will tell if this will break the camel’s back, but for now, oil prices are firming up and positioning has been building a case for a breakout.
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.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital 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), GAIN Capital Singapore 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 GAIN Capital Singapore 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 GAIN Capital Singapore 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.
GAIN Capital Singapore 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 cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.