US dollar: traders cautiously prepare for USD growth

The Commodity Futures Trading Commission (CFTC) COT (Commitments of Traders) reports for the week ending on Tuesday last week showed:

For the second week in a row, large speculators (NON-COMMERCIAL) increased their net position to buy contracts on the dollar index, bringing it up to 11.4 thousand contracts. This is 0.6 thousand contracts higher than the lowest levels seen since the start of July 2021.

Hedgers (COMMERCIAL) increased their net sell position on dollar index contracts by 0.6k contracts to 13.3k for the second week in a row. Additionally, Hedgers-operators increased their net buy position.

The open interest decreased by 1,700 contracts, bringing the total to 32,800.

The ratio of the number of buy contracts to the number of sell contracts for the bullish index of large speculators increased by 0.18 to 1.98 over the week.

The COT report data on the dollar index (USDX) shows that bullish sentiment on the US currency is increasing. For the second week in a row, traders are cautiously increasing their net position on the US dollar from the levels that have been at a low for the past 22 months. Large funds have decreased their sales by 13% in the last week. If this trend continues, it could lead to an increase in the value of the US dollar.

COT report data is essential for medium and long-term trading, and is mainly used by large speculators, NON-COMMERCIAL (banks, investment funds). These traders usually follow the trend (blue line). Small speculators, NONREPORTABLE POSITIONS, however, have little influence on the market (red line). Hedgers, COMMERCIAL (operators, large companies), on the other hand, usually trade against the trend (black line). The net position is the difference between the number of buy and sell contracts, while open interest is the total of all open positions in the market.