Forex
The latest reporting week to 3 November captures speculative positioning immediately ahead of the US midterm elections, providing a snapshot of how traders approached a major political risk event that ultimately delivered a dramatic Democratic sweep of Congress. Ahead of the vote, US equities remained under pressure, while the dollar and Treasury yields traded relatively steady.
Speculators largely reinforced existing positioning trends, adding to euro and Australian dollar shorts while covering short positions in the Swiss franc, sterling and Canadian dollar. These opposing flows helped reduce the aggregate dollar long against eight IMM currency futures by 5% to USD 36.5 billion, down from a recent peak above USD 44 billion.
The most notable developments were a further increase in the euro net short to a fresh ten-year high of 158k contracts (USD 22 billion) and a record Australian dollar net short that kept rising, reaching of 129.5k contracts (USD 9 billion). Meanwhile, Swiss franc short covering reduced the net short to 16.6k contracts, its smallest since early 2024.
With the election outcome now known, these short positions, some of them elevated, help explain the initial knee-jerk rebound in several currencies last Wednesday as the dollar weakened. However, the recovery proved short-lived, with renewed selling pressure across most currencies helping lift the Bloomberg Dollar Index to its highest weekly close in 18 months.
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Commodities: A sea of red
The latest reporting week to 3 November captures speculative positioning across major commodity futures immediately ahead of the US midterm elections, providing a snapshot of how traders approached a major political risk event that ultimately delivered a dramatic Democratic sweep of Congress. In the week leading up to the vote, the Bloomberg Commodity Index (BCOM) slumped 3.3%, with all sectors declining, led by precious metals and energy.
Hedge funds responded by becoming net sellers across all 25 major commodity futures contracts tracked in this update, an unusually one-sided move reflecting broad-based risk reduction ahead of the election. While most contracts saw a combination of long liquidation and fresh short selling, the reductions in Brent, soybeans and soybean meal were driven predominantly by long liquidation, while corn saw a particularly sharp increase in outright shorts. Overall, the combined net long slumped by 393k contracts, or 33%, to 783k, its lowest level in several months.
Energy: The combined crude oil net long fell by 81.3k contracts to 268.4k, a three-month low, as prices weakened on renewed hopes for a US-Iran deal. Meanwhile, the combined natural gas net short reached a fresh six-year high of 216.6k contracts, with persistent price weakness encouraging further short selling, inadvertently leaving prices exposed to the risk of US cold snap supporting prices.
Metals: Continued silver weakness and gold’s technical break below USD 3,970 triggered broad risk reduction across the sector. Silver’s net long shrank to just 2.7k contracts, while platinum joined palladium in net short territory for the first time since May 2025. Gold’s net long fell to a five-month low of 104k contracts, while copper’s dropped to a 14-month low of 34.4k, down from a September peak above 82k contracts.
These positioning shifts help explain the strong post-election rebound, as the Democrats’ midterm sweep wrong-footed bearish traders and triggered aggressive short covering, particularly among CTAs. However, with the initial recovery driven largely by position adjustments rather than renewed buying conviction, a sustained rally will require more fundamental support. That said, relatively light positioning leaves the sector sensitive to shifts in the technical and fundamental outlook, potentially amplifying price moves as year-end approaches.
Agriculture: In grains, the dramatic unwind from September’s record net long above one million contracts continued. Reduced longs across the soybean complex were increasingly offset by growing shorts in corn and wheat, leaving the combined grains and oilseeds net long at just 166k contracts, an 83% reduction in six weeks. The most striking reversal has been in corn, where an 18% price slump since September has driven positioning from a record net long of 431k contracts to a net short of 23k. Elsewhere, all soft commodities saw net selling, led by sugar, which only three weeks earlier had reached its highest net long in five years.
