US dollar: traders preparing for USD take-off?

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

For the second week in a row, large speculators (NON-COMMERCIAL) have increased their net position to purchase contracts on the dollar index, rising from close to the lowest levels since the start of July 2021 to 6.1 thousand contracts, a 2.7 thousand contract increase. This is the highest net position since July 18.

Hedgers (COMMERCIAL) increased their net position to sell contracts on the dollar index by 2.7 thousand contracts, bringing the total to 7.7 thousand. This marks the second consecutive week that hedger operators have increased their net position to sell.

The open interest rose by 4.4 thousand contracts, bringing the total to 41 thousand.

The ratio of the number of contracts to buy to the number of contracts to sell for the bullish index of large speculators rose 0.15 over the week, reaching 1.32.

Data from the COT dollar index (USDX) indicates a strong bullish sentiment for the US dollar. Over the past week, traders have increased their net position on the dollar, reaching its highest level in almost two months. Large speculators have increased their purchases by 10%, while sales have also decreased. If this trend continues, it could lead to further appreciation of the US dollar.

COT reporting data is essential for medium to long term trading. Generally, large speculators, NON-COMMERCIAL (banks, investment funds) tend to follow the trend (blue line). Small speculators, NONREPORTABLE POSITIONS, however, usually do not have much of an effect 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.