Forex
The latest reporting week captured the market’s response to the resumption of US rate cuts, a well-anticipated move that left the dollar index up around 0.6% as of last Tuesday. All eight IMM futures tracked in this update traded lower, led by weakness in NZD, AUD and GBP. However, speculators used the pullback to add exposure, lifting the overall gross dollar short by 10% to USD 8.7 billion. This was driven by increased length in CHF, GBP and especially JPY, only partly offset by net selling in EUR, CAD and the antipodeans.
The standout was MXN, where the net long climbed to a 15-month high at 83.4k contracts, far above the five-year average of around 27k contracts and the only position stretched relative to long-term norms.
Commodities
Overall, the Bloomberg Commodity Index fell 1.5% during the reporting week to just before broad strength, as we highlighted in our latest “Commodity Weekly,” drove prices to a strong end-of-week finish and towards the highest monthly close since May 2022.
Precious metals and livestock were the only two sectors trading higher during the FOMC rate-cutting week to 23 September, while the rest suffered notable setbacks. Softs led the decline, slumping 8.1% on the back of a 14.5% drop in Arabica coffee. Grains also faced broad selling pressure, as harvest flows and weak Chinese demand pushed managed money accounts into net short positions across all six major CME-traded contracts for the first time in 20 months, while the combined net short was the highest ever recorded for this period.
In energy, sellers returned to Brent and WTI, though the 19.3k contract reduction—driven primarily by long liquidation rather than new short positions—was modest compared with the 53.4k contracts added the previous week.
Precious metals extended their strong run, prompting light profit-taking in gold alongside continued modest net buying in silver and platinum. In copper, managed money lifted the net long to a 15-month high of 44.5k
contracts, just ahead of Freeport’s force majeure announcement following the accident at its Grasberg mine in Indonesia.
