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US Dollar Buying Persists, GBP/USD Bulls are Vulnerable – COT Report

COT Report – USD, GBP & EUR Analysis

The Predictive Power of the COT Report

How to Read the CFTC Report

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Source: CFTC, DailyFX (Covers up to Feb 18th, released Feb 21st)

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US Dollar Buying Persists, GBP/USD Bulls are Vulnerable – COT Report

The latest CFTC report highlighted that bullish bets in the US Dollar continued to pick up as safe-haven flows dominated. Subsequently, $1.4bln of long positions were added, to total $15.6bln against G10 currencies with broad based selling seen across several currencies.

As the outlook for the Euro remains weak, investors have continued to sell the currency with net shorts rising yet again to $12.3bln. This had largely been driven by another increase in gross shorts, which are now at its largest since the back-end of 2016. In turn, with sentiment deteriorating in the Euro, upticks in the currency are likely to be shallow and instead offer opportunities for renewed selling.

Elsewhere, the Canadian Dollar, Japanese Yen and Swiss Franc all saw marginal selling. With risk sentiment challenged by the rising spread of the coronavirus, speculators shunned the Australian and New Zealand Dollar, which both were sold in the week to February 18th.

The Pound saw net longs pick up by $670mln to $2.4bln, slightly below January’s peak, where gross longs are the highest since June 2018. Although, with focus set to return on the UK-EU trade talks and with the mood relatively tense, GBP bulls are somewhat pullback to an increase in tensions are talks begin next week.

COT REPORT RANGES EXTREME

US Dollar

US Dollar Bulls

EUR/USD

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GBP/USD

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USD/JPY

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USD/CHF

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USD/CAD

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AUD/USD

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NZD/USD

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For a more in-depth analysis on FX, check out the FX Forecast

— Written by Justin McQueen, Market Analyst

Follow Justin on Twitter @JMcQueenFX