COT: Speculators continue to sell dollars and buy gold

Nine weeks of corn buying paused after the June 28 acreage report threw a spanner in the works. The on paper bearish but, probably not report helped trigger a small 3% reduction in the net-long. Continued concerns relating to slow growing pace and with that a delayed (early frost exposed) harvest kept the long side immune from the selling with fresh short positions providing the change. 

In soft commodities the most noticeable change was the 50% reduction in the Arabica coffee net-short to 15k lots, the lowest since September 2017.

Forex

Speculators cut their gross dollar long against ten IMM currency futures by $7.4 billion to just $12.4 billion, the lowest since June 2018. Bullish dollar bets have now been cut by 65% since the end of April peak. 

The dollar selling was broad-based but concentrated against EUR ($3.5bn), JPY ($1bn) and CAD ($1.6bn). The latter turned bullish for the first time since March 2018 while speculators were the least bearish on the JPY since June 2018. GBP and MXN being the two exceptions as they were both sold. 

What is the Commitments of Traders report?

The Commitments of Traders (COT) report is issued by the US Commodity Futures Trading Commission (CFTC) every Friday at 15:30 EST with data from the week ending the previous Tuesday. The report breaks down the open interest across major futures markets from bonds, stock index, currencies and commodities. The ICE Futures Europe Exchange issues a similar report, also on Fridays, covering Brent crude oil and gas oil.

In commodities, the open interest is broken into the following categories: Producer/Merchant/Processor/User; Swap Dealers; Managed Money and other.

In financials the categories are Dealer/Intermediary; Asset Manager/Institutional; Managed Money and other.

Our focus is primarily on the behaviour of Managed Money traders such as commodity trading advisors (CTA), commodity pool operators (CPO), and unregistered funds.

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.