USD/JPY, AUD/USD, Gold Analysis: COT report

The latest Commitment of Traders (COT) report highlights key shifts across AUD/USD, USD/JPY, and gold futures. Speculators trimmed bearish exposure to the Australian dollar at the fastest pace in more than four years, suggesting sentiment may be turning. Positioning in the Japanese yen remains divided, with both gross-longs and gross-shorts increasing as traders balance Fed rate cut bets with political uncertainty in Japan. Meanwhile, gold futures saw strong inflows, with large speculators and managed funds boosting net-long exposure alongside a technical breakout, reinforcing the bullish case for precious metals.

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Charts prepared by Matt Simpson - data source: CME, LSEG

Weekly COT Report Highlights: AUD/USD Shorts Ease, JPY Futures Mixed, Gold Bulls Advance

US Dollar (USD): Net-short exposure fell -0.5 billion to -$5.6 billion last week
European dollar (EUR): Asset managers were their most bullish since January 2024
British pound (GBP): Asset managers and large speculators increased their net-short exposure for a second week
Japanese yen (JPY): Gross-shorts among large specs reached a 7-month high
Australian dollar (AUD): Large specs reduced gross-shorts at their fastest pace in 4.5 years
Canadian dollar (CAD): Net-short exposure rose by 4k contracts
New Zealand dollar (NZD): Gross-shorts rose for a sixth week among both sets of traders
Gold (GC): Net-long exposure rose by 54.8k contracts between managed funds and large specs

AUD/USD Positioning: Australian Dollar Futures – Weekly COT Report Analysis

There was a notable round of short covering in AUD/USD futures last week, as markets increasingly acknowledge that the Reserve Bank of Australia (RBA) is unlikely to cut its cash rate any time soon. Both inflation and growth have surprised to the upside, while surveys show improving confidence among consumers and businesses. Household spending and the labour market also remain resilient.

Large speculators reduced their gross-short exposure at the fastest pace in 4.5 years, while asset managers cut theirs at the quickest pace in two years. Positioning remains heavily net-short on the Australian dollar, but with back-to-back Fed cuts now being priced in, I expect further reductions in short exposure in the weeks ahead.

Chart prepared by Matt Simpson - data source: CME, LSEG

JPY/USD Positioning: Japanese Yen Futures – Weekly COT Report Analysis

In recent weeks I have outlined my case for yen bulls to regain traction, though the resignation of Japan’s PM weakens the case for BOJ hikes. SO whiled the US dollar could weaken on Fed-cut bets, the potential bearishness of USD/JPY may be limited if BOJ hikes really are off the table. Furthermore, if US data continues to deteriorate, the US dollar could gain a safe-haven bid which could work in the favour of USD/JPY bulls.

This means that we may need to take the rise of long bets in favour of the Japanese yen may need to be taken with a pinch of salt. And perhaps more attention should be paid to the rise of gross-shorts to the yen among large speculators.

Chart prepared by Matt Simpson - data source: CME, LSEG

Gold Futures Positioning (GC): Weekly COT Report Analysis

Gold bulls enjoyed a convincing breakout last week from a triangle continuation pattern. Traders were already positioning ahead of the move, with the latest COT data showing large speculators increasing net-long exposure by +35.2k contracts and managed funds by +19.6k contracts. Since positioning is not yet at a sentiment extreme, the setup still favours dip buyers, suggesting gold bulls are likely to continue seeking opportunities on pullbacks.

Chart prepared by Matt Simpson - data source: CME, LSEG

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-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

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