US dollar: hedgers' net position falls to 2.5-year low

The Commodity Futures Trading Commission (CFTC) reported, for the week ending last Tuesday, that the Commitments of Traders (COT) reports showed.

For the third week in a row, and for 4 weeks out of the last 5, large speculators (NON-COMMERCIAL) have decreased their net position to purchase contracts on the dollar index by 0.8 thousand contracts, bringing it down to 3.1 thousand. This is the lowest net position since August 29.

Hedger operators have decreased their net position to sell contracts on the dollar index by 1 thousand contracts over the past 5 weeks, bringing it down to 2.2 thousand. This is the lowest net position since June 15, 2021, surpassing even the levels seen in August.

The open interest rose by 0.3 thousand contracts, bringing the total to 22 thousand.

The ratio of the number of contracts to buy to the number of contracts to sell for the bullish index of large speculators decreased by 0.07 to 1.26 over the week.

The Commitment of Traders (COT) report on the dollar index (USDX) shows a growing bearish sentiment for the US currency. After the quarterly expiration of currency futures, traders have continued to reduce their net position on dollar growth. Over the past 4 months, the net position of large speculators has become minimal, and the net position of hedgers is the lowest it has been in 2.5 years. Additionally, large speculators have reduced their purchases by 5% over the week. If this trend continues, it could lead to a decrease in the value of the US dollar.

COT reporting data is essential for medium to long term trading. Large speculators, NON-COMMERCIAL (banks, investment funds) usually trade in line with the trend (blue line). Small speculators, NONREPORTABLE POSITIONS, generally do not have much impact on the market (red line). Hedgers, COMMERCIAL (operators, large companies) usually trade against the trend (black line). The net position is the difference between the number of buy and sell contracts. Open interest is the total of all open positions in the market.