EUR/USD, US dollar, Dow Jones, crude oil analysis: COT report

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

By :Matt Simpson, Market Analyst

View the latest commitment of traders reports

Market positioning from the COT report - as of Tuesday Feb 6, 2024:

  • Gross-short exposure to EUR/USD futures rose at its most aggressive pace in 20 months, sending net-long exposure to a 68-week low
  • Large speculators increased their net-short exposure to AUD/USD futures to an 11-week high
  • Net-long exposure to gold futures rose for the first week in five
  • Net-long exposure to GBP/USD futures rose to a 21-week high
  • Large speculators flipped to net-long exposure to NZD/USD futures

US dollar positioning (IMM data) – COT report:

Traders flipped to net-long exposure to the US dollar against G10 currencies according to data complied by IMM, which took positioning to its most bullish level in 10 weeks. And despite being on the cusp of flipping to net-short exposure the week prior, large speculators actually increased their net-log exposure to the US dollar index last week.

We can see on the weekly US dollar index chart that a small shooting star formed to warn of weakness around the highs, and that trend resistance resides around 104.50 – 105. I therefore suspect that the upside for the US dollar could be limited from here, which may provide a level of support for EUR/USD.

EUR/USD (Euro dollar futures) positioning – COT report:

Short bets against EUR/USD are on the rise, with large speculators increasing their gross-short exposure at their most aggressive pace in 20 months last week. Net-long exposure has now dipped to a 68-week low among large speculators, and a 13-week low among asset managers.

NZD/USD (New Zealand dollar futures) positioning – COT report:

It is interesting to see that large speculators flipped to net-long exposure to NZD/USD futures ahead of ANZ’s call for two more 25bp hikes from the RBNZ. Asset managers remain net short NZD/USD futures, although gross longs rose for both groups of traders whilst gross-shorts were rimmed. Take note of the bullish engulfing week on NZD/USD to suggest the Kiwi dollar may be the best bet to express a bearish view against the US dollar compared with its peers.

Nasdaq, S&P 500, Dow Jones futures (DJ) positioning – COT report:

Asset managers trimmed gross-long exposure to S&P 500 futures and increased their shorts at the fastest weekly pace in 15 weeks. They also trimmed long and short exposure to Nasdaq 100 futures, but not at an alarming rate. Besides, futures continued to print record highs after the report was compiled and have also gaped higher at this week’s open.

Ultimately, asset managers remain net-long against the Dow Jones, Nasdaq 100 and S&P 500 futures markets yet none are showing immediate signs of a sentiment extreme.

WTI crude oil (CL) positioning – COT report:

Market positioning suggests traders were taking a more bearish view on WTI crude oil, yet headline risks remain a key driver for oil markets and that saw oil post strong gains after the report was compiled on Tuesday. Managed funds had reduced their gross longs by the largest weekly amount in over four years, and large speculators had trimmed longs at their fastest pace in 17 weeks. Both sets if traders had also increased their short exposure, but the meat of the movements were in the culling of longs. Yet headlines that Israel had rejected a ceasefire lit a match under crude oil prices, so we can only assume many shorts have been covered and freshly-dumped longs reinitiated.

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.