Saxo Bank publishes weekly trader engagement reports (BED) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM and VIX currency futures, we use the larger measure called non-trading.
The summary below highlights the futures positions and the changes made by hedge funds in commodities, forex and financials until Tuesday May 25th. helped lower volatility and upward stock markets. The week under review also caught the backdrop of the recent correction in commodities, mainly driven by weakness in industrial metals on fears of Chinese intervention and a sharp correction in grains.
The Bloomberg Commodity Index fell 1.9% in the week of the report to last Tuesday, with heavy losses in industrial metals (-4.2%) and grains (-5.2%) offsetting continued gains in precious metals and livestock. In response to these developments, hedge funds reduced bullish bets on 24 futures contracts to 2,286,000 lots by 6%, a six-week low. With the exception of gold and WTI crude oil, sales were strong, with the largest declines seen for natural gas, Brent crude oil, HG copper, soybeans and corn.
Speculators bought WTI crude oil (+18k lots) and sold Brent (-27.5), leaving the combined net down 9.5k lots for the week to 624k lots, the lowest since January. The increase in WTI betting was driven by growing demand for fuel in the United States ahead of Memorial Day weekend which marks the start of the country’s summer driving season, with lowest gasoline stocks in nearly three decades as well as crude inventories at Cushing, WTI’s delivery center, some 17% below the five-year average. Brent, the global benchmark, recorded net sales due to the risk of increased Iranian production and virus outbreaks in Asia dampening demand.
WTI-led crude futures (OILUSJUL21) remain supportive as the US summer driving season begins, while Brent (OILUKAUG21) continues to struggle to break above $ 70 ahead of yet another round of trading on Iranian nuclear and Tuesday’s OPEC + meeting where the group is expected to confirm an already agreed to an increase of 0.8 million barrels per day for July. Until the market receives more clarity on the outcome of these, the upside potential beyond the March high of $ 71.40 appears limited.
The grains sector suffered another week of sharp price corrections and cuts in bullish bets. Led by soybeans, corn and, to a lesser extent, wheat, the combined net-long fell 10% to a seven-month low of 412,000 lots, with CBOT’s position again falling almost to dish.
The gold buy extended into a fourth week with a net increase of 20,000 lots to reach a four-month high of 126.9,000. It should be noted that most of the changes over the past week were driven by a 27% reduction of the gross short position to its lowest since last July. Another sign that long term trending systems, the largest position holders in the trending system universe, continue to reduce short positions, thus providing a constant supply in the market. Especially after the price broke the downtrend from the August high and after the price recently returned above its 200-day moving average.
Bullish HG copper bets, meanwhile, fell 35% to 33.9,000 lots, the smallest bet on price hikes since last July. The main culprit behind copper’s reduction and recent 9% correction being China’s attempt to cut commodity prices and hoarding in the domestic market. An attempt that Goldman Sachs and Citigroup expect to fail due to the rapid rebound in demand in advanced economies, particularly the United States
The current rally in gold has left both platinum and silver lagging behind, and during the week both metals saw net sells, most notable being the 17% reduction in the long-to-long platinum net. a 5-1 / 2 month low at 14.6k.
Gold (XAUUSD) is heading for its biggest monthly gain since July, as inflation remains the main target, while Bitcoin meanwhile is heading for its worst month since 2011. The recovery in ETF-backed ETF holdings bullion and fund positions on futures remains subdued, indicating that many investors remain skeptical about the direction in the short to medium term.
However, the failure of Friday’s attempt to lower could indicate that constant bidding and short hedging of long-term trend systems is underway. Focus this week on Friday’s jobs report and if gold can break above $ 1,923, the 61.8% retracement of the August-March correction. Key support in the $ 1845-55 area.
On forex, the flow for the week through May 25 was skewed in favor of continued dollar selling, with the Bloomberg Dollar Index approaching the January low before seeing a slight recovery in the days that followed. the reference period. After six weeks of continued selling of the greenback against ten IMM currency futures, the Dollar Index hit a three-month high at $ 16.8 billion. There were a few small sales of AUD and CAD, but overall buyers had the upper hand, especially in euros (4.1,000 lots or the equivalent of $ 0.6 billion), in pounds sterling ($ 5.8,000 or $ 0.5 billion) and CHF ($ 3.1,000 or $ 0.3 billion).
What is the Merchant Engagement Report?
COT reports are published by the US Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and diesel. They are released every Friday after the US close with data for the week ending the previous Tuesday. They break down the open interest in futures markets into different user groups based on asset class.
This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of the Saxo Bank group via RSS feeds on FX Empire