This COT report highlights futures positions and changes made by commodities, forex and financials hedge funds through Tuesday, January 4. rout of US bonds. The commodities sector traded higher, mainly supported by the industrial metals and soft metals sector, with the best individual performers being crude oil, soybeans, coffee and cotton.

In terms of market action around the New Year, the Nasdaq lost 1.3% as the higher concentration of value stocks saw the S&P 500 trading almost unchanged. The dollar remained stable as US ten-year yields jumped 17 basis points to 1.65%.

Saxo Bank publishes weekly Trader Engagement (COT) reports 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.

Merchandise

The commodities sector traded higher, mainly supported by the industrial metals and soft metals sector, with the best individual performers being crude oil, soybeans, coffee and cotton. These losses were somewhat offset by losses of natural gas, palladium, wheat and sugar.

Speculators’ reaction to these developments has been relatively subdued, most likely due to the time of year when the books barely reopened until the end of publication week last Tuesday. Overall, the energy sector saw some buying led by Brent crude oil and gasoline. The metals were mixed, with the sale of gold offset by the purchase of silver, the short sale of platinum was halved while the length of copper increased by 27%.

The agricultural sector saw strong demand for soybeans in response to crop concerns in Brazil, while the plentiful supply saw CBOT wheat increase 69% to a six-month high. In softs, the sale of sugar took the net long to a 17 month low while the 7% increase in cotton long took the long / short ratio to a very unhealthy 151 longs for each short.

Latest comments from today’s Market Quick Take:

Crude Oil (OILUKMAR22 & ​​OILUSFEB22) is trading stable with a focus on robust demand and so far limited fallout from the omicron push, as well as the prospect that OPEC + will struggle to achieve the production increases promised as several producers have started to reach their limit, some for lack of investment.

Countering the near-term threat of even higher prices mitigates supply disruptions in Libya and Kazakhstan, but overall demand remains robust, as indicated by the six-month Brent forward spread which has more than doubled since December, demand for omicron is weak. point. Focus this week on the EIA’s STEO and US CPI, as well as omicron developments, especially in China where the zero tolerance approach can hurt demand due to lockdowns.

Gold (XAUUSD) had a relatively strong first week of trading with the sharp 30bp increase in US 10-year real yields to a six-month high of -0.78% being partially offset by a dollar and weaker stocks as well as geopolitical risks; and rising inflation, as shown by higher wage pressures in Friday’s US jobs report.

Yields rose again overnight, with the market starting to factor in four Fed rate hikes in 2022, as early as March. Silver (XAGUSD) meanwhile continues to find support around $ 22 ahead of the key double dip at $ 21.42 while resistance can be found at $ 22.65. Gold remains contested as long as it stays below the triple top at $ 1,830 and so far $ 1,783 has prevented an even bigger sell-off.

Forex

In forex, speculative flows were mixed, allowing the combined dollar to buy IMM ten currency futures and the dollar index to hold steady at $ 23.2 billion, with purchases of ‘EUR, CHF and GBP being offset by selling JPY and AUD.

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 the futures markets into different user groups based on the asset class.

Commodities: Producer / Merchant / Processor / User, Swap dealers, Managed money and other

Finances: Dealer / Intermediary; Asset manager / Institutional; Leverage funds and other

Forex: a wide distribution between commercial and non commercial (speculators)

The reasons we mainly focus on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure who is covered
  • This makes them most responsive to changes in the evolution of fundamental or technical prices
  • It provides views on major trends but also helps to decipher when a reversal is imminent

Ole Hansen, Head of Commodities Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of the Saxo Bank group via RSS feeds on FX Empire