Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
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COT report: Silver and copper stands out in week of continued energy weakness
Ole Hansen
Head of Commodity Strategy
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, 11 March, 2025.
- Eight weeks of selling has cut the USD long to a five-month low, primarily driven by demand for EUR and JPY.
- A mixed week in commodities with continued selling of energy and grains, buying of silver and copper the main focus
Forex:
In the forex market, a 2.2% slump in the Dollar Index supported a continued reduction in speculative long dollar positions. Overall, an eighth consecutive week of net USD selling reduced the gross long versus eight IMM futures to a five-month low at USD 5 billion, down from a January USD 35 billion peak just before a number of Trump policy announcements triggered a major and ongoing reversal.
Besides continued demand for GBP, which in the past six weeks has seen the net flip from a short to a 29k long, the main driver once again was strong demand for euros, which saw the net flip back to a net long for the first time since October. In the past four weeks alone, speculators bought 77.5k contracts or EUR 9.7 billion. The JPY long, meanwhile, held steady at a record high at 134k contracts or USD 11.4 billion equivalent, while the MXN long reached a three-month high.
Commodities:
Despite a 1.3% rebound in the Bloomberg Commodity Index, hedge funds continued their third consecutive week of net selling, still reacting to the late-February correction that saw the index drop 4.6% before recovering. The total net long across 27 major futures contracts has declined by 44% during this time after hitting a 2-1/2-year high, led by selling across energy and grains.
Energy: The sector’s selloff extended to a seventh week, with the net long position down 62% to 224K contracts during this time—half the three-year average. Economic concerns pressured fuel markets, increasing gas oil shorts while NY-traded RBOB gasoline and ULSD diesel positions were cut to near neutral. Gasoline saw fresh short selling (-15.2K), and ULSD experienced long liquidation (-8.7K). Consequently, leaving the RBOB contract mostly exposed to short covering and it partly explains why RBOB is up 3.1% since last Tuesday, while ULSD is unchanged.
Metals: Gold remained steady before surging to $3,000 per ounce at week’s end, with minimal hedge fund activity seen during the reporting week. Silver (+2.4%) and copper (+4.6%) gains contributed to increased net longs in both.
Grains: Corn’s 4.2% rally coincided with net selling as hedge funds cut bullish bets, fearing China’s counter tariffs would hurt exports. The soybean short position shrank, while wheat remained under pressure despite rotation between Chicago and Kansas contracts.
Softs: Sugar’s volatility challenged hedge funds, with a 20% rally through February followed by a sharp correction and rebound. Overall, these sharp and sudden price swings saw the net long position fall 47% in a week when sugar gained 3%.
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:
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
28 Feb 2025: Commodities weekly: Broad weakness as tariff fatigue sets in
24 Feb 2025: COT Report: traders turn selective despite ongoing broad rally
21 Feb 2025: Commodities weekly: energy market strength and Trump rethoric fuel surge
18 Feb 2025: COT report: crude, gold and grains see mild profit taking
5 Feb 2025: Broad Strength Drives Commodities sector to 26-month High
4 Feb 2025: Crude Oil Wipes Out 2025 Gains as Tariffs and Demand Weighs
3 Feb 2025: COT Report: Mixed Week Seen Ahead of Trump's Tariff Offensive
1 Feb 2025: YouTube: Joining Kevin Muir on The Market Huddle podcast
Podcasts that include commodities focus:
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?
25 Feb 2025: Meltdown risks are rising. What to watch next
18 Feb 2025: Europe is on fire
5 Feb 2025: Mag 7 risks underappreciated?
3 Feb 2025: If new Trump tariffs stick, markets have only just begun to react
31 Jan 2025: Does the market think Trump is bluffing?
29 Jan 2025: The DeepSeek winners emerge
27 Jan 2025: DeepSeeking missile strikes global markets
24 Jan 2025: Four days in, Trump continues to dominate headlines, but ...
20 Jan 2025: Trump 2.0 swings into action
17 Jan 2025: Brace for Monday, as a new era begins
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