FX Futures Positioning: Yen Shorts Built Ahead of Yen Surge | COT Report

Large speculators built their largest Japanese yen net-short position in months just ahead of a sharp yen surge, while broader FX positioning also showed signs of shifting. US dollar net longs fell for a fifth week, euro shorts eased to a six-week low and commodity-currency shorts were reduced.

 

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FX Futures Positioning Shows Yen Shorts Rising Before Sharp Reversal

Large Speculator Positioning from the COT report

Source: CFTC (COT), LSEG

• US Dollar: Net longs fell for a fifth week, though only by $0.8 billion to $25.4 billion
• EUR/USD: Net shorts fell to a six-week low of 25k contracts among large speculators
• GBP/USD: First increase in net-short exposure in five weeks among large speculators and asset managers
• USD/JPY: Net-short exposure fell by 29k contracts to -2k among large speculators
• USD/CHF: Net shorts rose by 6.4k contracts among both sets of traders
• USD/CAD: Traders continued to reduce net shorts for a fourth week heading into the BoC’s hawkish hold
• AUD/USD: Net shorts were reduced by a combined 20k contracts between large speculators and asset managers
• NZD/USD: Asset managers were net long for a second week, while large speculators reduced net shorts to 8k contracts

Asset Manager Positioning | COT Report

Source: CFTC (COT), LSEG

 

FX Futures Positioning | COT Report (IMM Data)

US Dollar Index (DXY) Futures Positioning | COT Report

My core bias for the US dollar remains that the high for the year was seen in June, and we’re now within an impulsive move lower. However, every trend hits a speed bump, and the potential for renewed Fed hike bets and stronger CPI could help the US dollar retrace higher over the near term.

Futures traders remain net long the US dollar in aggregate by $25.4 billion, though that is down nearly 50% from its 11-year high and has been reduced for a fifth week.

The trend in net-long exposure among asset managers and large speculators remains bullish, though it has been trimmed in recent weeks.

Ultimately, I think we could be in for some chop with a bullish tinge in the coming weeks for the US dollar index before its next proper leg lower presents itself.

Source: CFTC (COT), ICE, LSEG

EUR/USD Futures Positioning | COT Report

A hot CPI print for the Euro Area cemented already strong odds of an ECB hike this week. This makes the meeting more about forward guidance than the hike itself, and a hawkish tone could see large speculators revert to net-long exposure.

Currently, their net shorts sit at a six-week low of 25k contracts, while asset managers remain net long by around 26k. But the fact that gross shorts are moving lower among large specs while longs are curling higher suggests we could be approaching another leg higher for the euro, which could provide another source of pressure for the US dollar index.

Source: CFTC (COT), CME, LSEG

 

USD/JPY Futures Positioning | COT Report

Futures traders that bet against the Ministry of Finance’s appetite for intervention likely regretted their choices. Large speculators increased their net-short exposure to the Japanese yen by 29.9k contracts to 92.2k contracts by last Tuesday, yet it seems the MoF went on to intervene and send the yen surging – which was bearish for USD/JPY.

While a stronger-than-expected NFP report helped USD/JPY recover from its lows, the path of least resistance could be lower over the coming months, and traders may be seeking to fade into rallies. A hot US CPI could stand in its way, but price action on USD/JPY, to my eyes, appears to be within a larger impulsive move lower.

Source: CFTC (COT), CME, LSEG

 

Commodity FX Futures Positioning (AUD, CAD, NZD) | COT Report

Futures traders are seemingly hedging their bets, with both asset managers and large specs increasing longs and shorts. Still, net-short exposure fell by a combined 20k contracts last week, with the bulk of the reduction coming from asset managers amid renewed RBA hike bets.

Short bets against the New Zealand dollar continued to collapse heading into last week’s RBNZ meeting. Traders still see at least one more hike by mid-2027, although a weak employment backdrop brings some doubt over how high rates can go.

Asset managers were net long for a second week, while large specs reduced their net-short exposure to just 8k contracts.

Positioning in the Canadian dollar futures market is one of the clearer signals, with gross shorts trending lower and longs rising in recent weeks. This has seen combined net-short exposure reduced to 150k contracts.

Source: CFTC (COT), CME, LSEG