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US Dollar net speculator positions rose to $28.14 billion last week

The latest data for the weekly Commitment of Traders (COT) report, released by the Commodity Futures Trading Commission (CFTC) on Friday, showed that large traders and currency speculators continued to increase their bullish bets for the US dollar for the third week in a row last week as traders expect the US Federal Reserve to raise interest rates.

Non-commercial large futures traders, including hedge funds and large speculators, had an overall US dollar long position totaling $28.14 billion as of Tuesday December 6th, according to the latest data from the CFTC and dollar amount calculations by Reuters. This was a weekly gain of $3.32 billion from the $24.82 billion total long position that was registered the previous week, according to the Reuters calculation (totals of the US dollar contracts against the combined contracts of the euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc).

The US dollar speculative net bullish positions, up for three straight weeks and ten out of the last eleven weeks, are currently standing at their highest level since January 5th 2016 when aggregate bullish positions totaled $28.78 billion.

The market is just about unanimous in its expectation (around 95%) that the Federal Reserve will raise its interest rate at the December 14th meeting. In contrast, most other major central banks are continuing on the path of more dovish policies for their respective countries. This divergence in policy continues to be a major driver of dollar strength in the currency markets.

Weekly Speculator Contract Changes:

The major currencies that improved against the US dollar last week were the euro (4,684 weekly change in contracts), British pound sterling (897 contracts), Canadian dollar (418 contracts) and the Mexican peso (434 contracts).

The currencies whose speculative bets declined last week versus the dollar were the Japanese yen (-33,668 contracts), New Zealand dollar (-2,080 contracts), Swiss franc (-1,063 contracts) and the Australian dollar (-86 contracts).

Table of Weekly Commercial (Comms) Traders and Speculators (Specs) Levels & Changes:

 

This latest COT data is through Tuesday and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the dollar will gain versus the euro.

Weekly Charts: Large Trader Weekly Positions vs Price

(*Note: commercial positions have now been added to charts in addition to the speculator positions)

EuroFX:

British Pound Sterling:

Japanese Yen:

Swiss Franc:

Canadian Dollar:

Australian Dollar:

New Zealand Dollar:

Mexican Peso:

*COT Report: The weekly commitment of traders report summarizes the total trader positions for open contracts in the futures trading 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). Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

The Commitment of Traders report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions data that was reported as of the previous Tuesday (3 days behind).

Each currency contract is a quote for that currency directly against the U.S. dollar, a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and a net long position expect that currency to rise versus the dollar.

(The charts overlay the forex closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.) See more information and explanation on the weekly COT report from the CFTC website.

Article by CountingPips.com