Weekly COT Report: Bulls Have All but Abandoned the Swiss Franc

The long / short ratio of bulls to bears on the Swiss franc hit a record low last week, which suggests we may be approaching a sentiment extreme for bearish positioning.


Traders remained heavily net-short CHF and JPY futures Read our guide on how to interpret the weekly COT report  

As of Tuesday 26th October 2021:

  • Net-long exposure to the US dollar was trimmed for a third week, according to data compiled by IMM (International Money Market). Traders are estimated to be net-long USD by $19.75 billion, down -$1.7 billion on the week, $19.4 billion of which is against G10 currencies and just $0.3 billion of net-long exposure against emerging currencies.
  • Traders flipped to net-long exposure on Canadian dollar futures, breaking an 8-week streak of bearish net exposure
  • Bears continued to increase net exposure to CHF and JPY futures
  • Short-covering saw net-long exposure to GBP futures rise to a 3-month high
  • Net-short exposure to AUD futures were trimmed by just -12 contracts, which is really not a lot considering the Australian dollar rose to a 16-week high and net-exposure is just off from record highs.



CAD futures flip to net-long exposure

Traders flipped to net-long exposure to CAD futures after 8 weeks being net-short

Traders flipped to net-long exposure to CAD futures for the first week in eight. It may only be by 3.3k contracts, but the move was seen with a rise of 5.6k new longs and reduction of -8.6k shorts, which pushed net exposure u by 14.2k contracts to the favour of the bull camp. Given CAD spent around 3-month correcting against its dominant bullish trend, prices do not appear to be stretched to the upside and momentum has now realigned with that bullish trend. So the flip to net-long is simply confirming the trend.


Is the Swiss franc reaching a sentiment extreme?

CHF futures have risen in recent weeks, despite net-short exposure to CHF also rising over the same period

Traders are their most bearish on Swiss franc futures since December 2019. The net exposure indicator has fallen for 10 of the past 11 weeks and gross longs are near a record low. Yet the futures prices rose to an 11-week high. At some point we will either see shorts covered to send prices higher, or prices need to turn lower to justify the current rate of bearish exposure.

Just 5.7% of traders hold long contracts on CHF futures

We suspect the former will take place (sentiment extreme to push prices higher) given just 5.7% of traders hold gross long positions, the 1-year Z-score is at -3 standard deviations. But, as always, we need price action to confirm.


bullish exposure to metals has risen overall

As of Tuesday 26th October 2021:

  • Traders increased net-long exposure to gold futures for a fourth week, and are now their most bullish
  • Large speculators were their most bullish on silver futures in 14-weeks.
  • Traders slightly increased net-long exposure to platinum futures to a 15-week high.


Can silver outperform gold?

Silver has rallied in recent weeks due to short covering

It is certainly a scenario to consider, given the rise of bullish interest on silver futures. Traders are now their most bullish on silver in 14-weeks, although as of yet its rally has been a function of short-covering. Therefore, we now want to see fresh longs initiated to provide the rally with some additional strength. However, both gold and silver are retracing against their trends so one way to monitor the relationship is to see which has the shallowest correction to reveal the stronger market for when or if bulls return.

How to trade with City Index

You can trade easily trade with City Index by using these four easy steps:

  1. Open an account, or log in if you’re already a customer 

    Open an account in the UK
    Open an account in Australia
    Open an account in Singapore

  2. Search for the company you want to trade in our award-winning platform 
  3. Choose your position and size, and your stop and limit levels 
  4. Place the trade


Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.