Quarterly Outlook
Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
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COT: Continued gold selling points to consolidation; USD weakness drives JPY long to a fresh record
Ole Hansen
Head of Commodity Strategy
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Key points:
- Our weekly commitment of traders update highlights futures positions and changes made by hedge funds across forex and commodities during the week ending Tuesday, 22 April 2025.
- The USD short versus eight IMM futures rose to a six-month high, with the JPY long reaching a fresh record high.
- Commodity markets continue to recover from the market meltdown that followed Trump’s early April tariff attack.
- Hedge funds showed a mixed response to these developments, the most interesting being a fifth week of gold selling, while crude saw net buying for the first time in four weeks, primarily led by short covering.
Forex:
COT on forex covering the week to 22 April, when the Dollar Index extended its slump to a fresh three-year low, saw speculators increase their gross USD short versus eight IMM futures to $14 billion, a six-month high. With the exception of the euro, all the other futures contracts saw net buying, led by GBP and CAD, while the JPY long reached a fresh record high at 178k contracts, or USD 15.8 billion equivalent, by far the most popular long ahead of the euro (USD 9.3 billion). Besides the elevated USD short, and despite continued short covering since December, the CAD short remains the second biggest at USD 5 billion equivalent.
Commodities:
In commodities, the latest reporting week to 22 April covered a period where markets continued to recover from the market meltdown that followed Trump’s early April ‘Liberation Day’ speech. The Bloomberg Commodity Index traded up 1.6% on the week, primarily led by gains across precious and industrial metals, as well as softs and livestock, while the energy sector saw strong gains in crude and fuel products being offset by another big loss in natural gas. Hedge funds showed a mixed response to these developments, the most interesting being a fifth week of gold selling—reducing their net long to a 13-month low—despite prices briefly hitting an all-time high at USD 3,500. Across the other metals, a net short position was maintained in range-bound platinum; silver’s rebound received a modest buying response, while the HG copper net long saw a small increase as the premium over London widened to 16% as traders continue to guess which level the US administration eventually will slap on imports into the U.S. In crude oil, a 67,000 contract increase in the combined Brent and WTI net long to 242k contracts was primarily driven by short covering from macro-focused funds reducing recession-related trades, while it will probably take a break above key technical resistance for the gross long to start rebuilding—in Brent above USD 69, and WTI above USD 65. The agriculture sector saw net buying, supported by demand for soybeans, wheat, cotton, and the three livestock contracts, not least live cattle, which trades near an all-time high. In grains, funds have now held a net short in the CBOT wheat contract for a record 147 weeks, since June 2022, while the Kansas short rose to near the 2019 record at 57k contracts.
What is the Commitments of Traders report?
The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.
Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
Forex: A broad breakdown between commercial and non-commercial (speculators)
The main reasons why we focus primarily on the behavior of speculators, such as hedge funds and trend-following CTA's are:
- They are likely to have tight stops and no underlying exposure that is being hedged
- This makes them most reactive to changes in fundamental or technical price developments
- It provides views about major trends but also helps to decipher when a reversal is looming
Do note that this group tends to anticipate, accelerate, and amplify price changes that have been set in motion by fundamentals. Being followers of momentum, this strategy often sees this group of traders buy into strength and sell into weakness, meaning that they are often found holding the biggest long near the peak of a cycle or the biggest short position ahead of a through in the market.
Recent commodity articles:
Recent commodity articles:
23 April 2025: Blowout top leaves Gold in consolidation mode
22 April 2025: Commodities return Why allocation matters
16 April 2025: Whats next as gold hits our USD 3300 target
15 April 2025: COT Reports show hedge funds racing to cash post-Liberation Day
11 April 2025: Commodities weekly As chaos reigns whats next for markets
10 April 2025: YouTube Interview: Gold, silver, copper, oil - prices, supply, demand in 2025
8 April 2025: Golds deleveraging pullback fails to shake supportive outlook
8 April 2025: Golds deleveraging pullback fails to shake supportive outlook
7 April 2025: COT on Forex and Commodities - April 7 2025
4 April 2025: Commodities weekly Tariff-led recession pain triggers sharp reversal
3 April 2025: Tariff-related recession fears ignite widespread commodities selloff
2 April 2025: Commodity Outlook: Commodities rally despite global uncertainty
31 Mch 2025: COT Report: Ongoing USD selling amid mixed week for commodities
26 Mch 2025: Commodities show strength in Q1, led by a select few
25 Mch 2025: Crude oil Sanctions threat counters tariff-driven demand worries
24 Mch 2025: COT on Forex and Commodities - 24 March 2025
21 Mch 2025: Commodities weekly: High-flying precious metal sees profit taking
19 Mch 2025: Has the gold express already left the station?
17 Mch 2025: COT Report: Silver and copper stands out in week of energy weakness
14 Mch 2025: Gold surges past USD 3,000 as haven demand grows
12 Mch 2025: Tariffs and the energy transition: Key drivers of copper demand
11 Mch 2025: Gold holds steady despite deleveraging risks in volatile markets
10 Mch 2025: COT Report: Wholesale reductions in speculators' USD and commodity longs
7 Mch 2025: Commodities Weekly: Tariffs, trade tensions, fiscal bazooka, and Ukraine
5 Mch 2025: Tariff threat disconnects HG copper from global market
4 Mch 2025: Stagflation and geopolitical tensions fuel renewed demand for gold
3 Mch 2025: COT Report: Broad retreat sees WTI longs slump to 15-year low
Podcasts that include commodities focus:
23 April 2025: Trump going soft on tariffs versus the direction of travel.
11 April 2025: US and China are slipping into an economic war
4 April 2025: Markets melts down as recession risks go global
1 April 2025: Bracing for Liberation Day
25 Mch 2025: Did Trump just blink?
18 Mch 2025: US market found support, but how durable will it be?
14 Mch 2025: Is silver set to shoot the lights out?
10 Mch 2025: US un-exceptionalism is the theme
7 Mch 2025: US bear market risks ratchet higher. EUR train has left the station
4 March 2025: Are we on the verge of a big whoosh?
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