Speculator Extremes: Australian Dollar, Brazil Real top Bullish & Bearish Positions

By InvestMacro

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on July 9th 2024.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the data table or cot leaders table)

Here Are This Week’s Most Bullish Speculator Positions:

Australian Dollar

The Australian Dollar speculator position comes in as the most bullish extreme standing this week. The Australian Dollar speculator level is currently at the maximum 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 47.6 this week. The overall net speculator position was a total of 2,413 net contracts this week with a boost of 18,249 contract in the weekly speculator bets.

Speculators or Non-Commercials Notes:

Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.

These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

Silver

The Silver speculator position comes next in the extreme standings this week. The Silver speculator level is also now at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score was 5.2 this week. The speculator position registered 61,056 net contracts this week with a weekly gain of 5,222 contracts in speculator bets.

British Pound

The British Pound speculator position comes in third this week in the extreme standings. The British Pound speculator level resides at a 100.0 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at 35.9 this week. The overall speculator position was 84,690 net contracts this week with a jump of 22,649 contracts in the weekly speculator bets.

Coffee

The Coffee speculator position comes up number four in the extreme standings this week. The Coffee speculator level is at a 99.4 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 12.0 this week. The overall speculator position was 75,420 net contracts this week with an increase by 7,659 contracts in the speculator bets.

Gold

The Gold speculator position rounds out the top five in this week’s bullish extreme standings. The Gold speculator level sits at a 91.2 percent score of its 3-year range. The six-week trend for the speculator strength score was 8.2 this week.

The speculator position was 254,775 net contracts this week with a rise of 13,232 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

Brazil Real

The Brazil Real speculator position comes in as the most bearish extreme standing this week. The Brazil Real speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -6.5 this week. The overall speculator position was -42,684 net contracts this week with a dip of -1,624 contracts in the speculator bets.

Swiss Franc

The Swiss Franc speculator position comes in next for the most bearish extreme standing on the week. The Swiss Franc speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -3.1 this week. The speculator position was -46,088 net contracts this week with a decrease of -2,645 contracts in the weekly speculator bets.

5-Year Bond

The 5-Year Bond speculator position comes in as third most bearish extreme standing of the week. The 5-Year Bond speculator level resides at a 0.4 percent score of its 3-year range.

The six-week trend for the speculator strength score was -11.4 this week. The overall speculator position was -1,566,601 net contracts this week with a decline of -28,629 contracts in the speculator bets.

Japanese Yen

The Japanese Yen speculator position comes in as this week’s fourth most bearish extreme standing. The Japanese Yen speculator level is at a 1.3 percent score of its 3-year range.

The six-week trend for the speculator strength score was -15.8 this week. The speculator position was -182,033 net contracts this week with a small gain of 2,190 contracts in the weekly speculator bets.

Cotton

Finally, the Cotton speculator position comes in as the fifth most bearish extreme standing for this week. The Cotton speculator level is at a 2.2 percent score of its 3-year range.

The six-week trend for the speculator strength score was -21.6 this week. The speculator position was -24,509 net contracts this week with a reduction by -7,188 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.