COT

COT report reveals mixed positioning in currencies, metals, and indices. USD shorts rise, gold longs build, and Wall Street futures diverge as volatility looms.

COT report reveals USD shorts trimmed and gold longs rising, though commodity currencies are on the verge of breakouts despite short bets against them. Wall Street indices see real-money accounts stepping in.

Positioning on the US dollar continues to suggest an oversold market. USD/CAD is rebounding in line with my bias, and large speculators have began betting against the Japanese yen.

Japanese yen net-longs hit record highs, but price action diverges. With USD oversold and the BoJ dovish, JPY bulls may be pushing their luck too far.

The commitment of traders (COT) report shows how large speculators are positioned across futures markets on the CME exchange.

Asset managers remained net-long the US dollar index, but may have since flipped to bet short with the USD index falling below 100. Traders were less bearish on the Australian and Canadian dollars, and increased bullish interest on EUR/USD.

A level of complacency ahead of Trump's tariffs can be seen in last week's futures market exposure, with traders increasing their short exposure to the VIX and Swiss franc, while also closing shorts against the Nasdaq at a notable pace.

Asset managers increased their gross-short exposure to EUR/USD for the first week in six. Asset managers trimmed net-long exposure to the US dollar index for a tenth week. And the large speculators that help flip VIX exposure to net-short may be regretting their move, looking at how Wall Street indices are now trading.

Some bullish fingers have likely been burned at this week's open, given the relatively bullish positioning on S&P 500 futures alongside short bets against the VIX rising to a 6-month high last week.

The commitment of traders (COT) report shows how large speculators are positioned across futures markets on the CME exchange.

The macro drivers that fuelled the Trump trade in Q4 may need some sort of booster to be sustained. And futures positioning is already displaying early signs of caution among EUR/USD and commodity FX bears.

Commodity currencies continued to feel the heat of the Trump trade, while asset managers stepped away from stocks in a month usually associated with strong gains. Gold seems likely to remain supported in the current environment, but for now we seem to be in a holding pattern waiting for fresh catalysts to kick off 2025.

Not only are traders increasingly long the US dollar, they are also piling into short EUR/USD bets. And that could pave the way for a sub-parity euro next year.

Large speculators flipped to net-long exposure yen futures for the first time in six weeks. And it did not come without warning from myself or market positioning over the prior two weeks. Bullish exposure is certainly not extreme at just 2.4k contracts, but with odds of a BOJ hike rising and asset managers net-short by just 5.8k contracts, we could be looking at a stronger yen as we head into the new year given the turbulence we may face during Trump’s second term.

We may have seen an important swing low on the yen looking at the change of speculative market positioning. And that could see a much deeper pullback on USD/JPY.

While traders pushed net-long exposure to the USD to a 20-week high, there is also been a notable pickup of long yen bets. They're also piling into EUR/USD shorts, which is why I continue to suspect USD/JPY and EUR/USD may converge and move lower.

Hot CPI from Canada, a rise of geopolitical tensions and increased threat of tariffs played nicely for commodity FX bulls, with AUD, CAD and NZD leading the pack among FX majors on Tuesday. And there could be some wriggle room for further gains.