Data show speculative traders have flipped from a net short to a net long position on euro

The IMM CFTC positioning data, released weekly by the Commodity Futures Trading Commission (CFTC), provides insights into how speculative traders, such as hedge funds and large investors, are positioned in major currency futures markets. This data is based on Commitments of Traders (COT) reports, which track the net long and short positions of non-commercial traders—those who are primarily engaged in speculative trading rather than hedging.

A net long position indicates that traders are overall bullish on a currency, expecting its value to rise, while a net short position reflects a bearish outlook, signaling expectations of a decline. Changes in these positions from week to week can help market participants gauge shifts in sentiment, potential trading opportunities, and broader macroeconomic trends affecting the forex market.

This data is widely watched as an indicator of market sentiment and can influence trading decisions, particularly in conjunction with economic data, central bank policies, and broader risk sentiment in global markets.

The latest data release was late on Friday. Highlights from the latest IMM CFTC positioning data:

1. EUR net speculative position now long 13,090 contracts as of Tuesday vs previous week’s short of 10,106

   • Speculative traders have flipped from a net short to a net long position on the euro. The previous week, they were net short 10,106 contracts, meaning they were betting against the euro. Now, they are net long 13,090 contracts, indicating a shift toward bullish sentiment on the currency.

2. JPY net spec long grows to 133,902 contracts vs previous long 133,651

   • Traders remain firmly net long on the Japanese yen, with their bullish positions increasing slightly from 133,651 to 133,902 contracts. This suggests that the market still favors the yen, possibly as a safe-haven play or due to expectations of yen strength.

3. GBP net spec long rises to 29,193 contracts from long of 18,574

   • Speculative traders have increased their bullish bets on the British pound, with net long positions rising from 18,574 to 29,193 contracts. This suggests growing confidence in sterling’s outlook, potentially driven by interest rate expectations, economic data, or relative strength against other currencies.

4. AUD net spec short 48,226 contracts vs short of 48,233

   • Bearish positioning on the Australian dollar remains nearly unchanged, with net shorts of 48,226 contracts compared to 48,233 the previous week. This suggests little change in market sentiment, with traders still betting against the AUD, possibly due to China’s economic slowdown, commodity price movements, or RBA policy outlook.

5. CHF net spec short 36,957 contracts vs short of 37,775

   • Traders remain net short on the Swiss franc, though the bearish position has slightly decreased from 37,775 to 36,957 contracts. This could indicate a slight easing of negative sentiment, but overall, traders still expect CHF weakness, possibly due to SNB policy or broader market risk appetite.

6. CAD net spec short 142,410 contracts vs short of 143,770

   • The Canadian dollar remains under heavy speculative pressure, with a large net short position of 142,410 contracts, only slightly lower than 143,770 the prior week. This suggests traders are still bearish on the CAD, potentially due to weaker oil prices, BoC rate expectations, or economic concerns.

Overall, the positioning data shows stronger sentiment for EUR, GBP, and MXN, while JPY remains favored, and AUD, CHF, and CAD still face bearish pressure.

This article was written by Eamonn Sheridan at www.forexlive.com.